www.daifuku.com

Value Growth Engine

Annual Report 2015 Year ended March 31, 2015

DAIFUKU CO., LTD. Daifuku at a Glance Operating Income Profile Daifuku aims to achieve operating income of 21 billion yen, the record-high, for the Since its founding in 1937, the Daifuku Group Consolidated Net Sales final year (FY2016) of its four-year business plan Value Innovation 2017. has established a long track record in material handling spanning a wide variety of sectors. Having aspired toward globalization from early Company Creed on, Daifuku today operates in 22 countries and regions and is the world’s top material handling systems manufacturer. Featuring an integrated approach from consulting to engineering, design, 14.8 billion yen manufacturing, sales, installation, and after-sales 267.2 billion yen services, Daifuku’s comprehensive business structure is one of its unique strengths. The Daifuku Group’s results for fiscal 2014 made steady progress with record-high orders Under Value Innovation 2017, a four-year busi- and sales, achieving increased sales and Today we are doing better ness plan that commenced in April 2013 with profits for the fifth year in a row. the key words of “innovation” and “solutions,” than we were yesterday. Tomorrow we will be growing 1 Daifuku seeks to become more responsive to No. ahead of where we are today. the needs of its customers and society, while Contents Sales in the World maintaining its core material handling business. Daifuku was ranked first in global sales in the Daifuku is evolving into a top-class Value 2 Our Business Company material handling industry, according to the Innovator that can offer the optimal and best Creed 3 Daifuku’s Growth Path “Top 20 System Suppliers 2014” survey solutions to help its customers gain a competitive 5 Financial Highlights conducted by the U.S. magazine Modern( ̈ See page 7) Materials Handling. edge. Management 6 Global Presence Philosophy 8 Message from the CEO Source: Modern Materials Handling - April 2015 14 Special Feature: Value Growth Engine 18 Corporate Governance Brand Proposition 21 Interviews with Outside Directors 22 Corporate Social Responsibility (CSR) 26 Directors, Auditors, and Officers Brand Message 28 Financial Section 42 Daifuku Global Network 43 Corporate Data, Investor Information

Daifuku North America Holding Company

Non-Japan Sales ROE Ratio Daifuku has set a final targeted ROE of Service Sales Ratio 10%, as a management indicator in the plan Value Innovation 2017. Service business bolsters Daifuku’s performance, based on the extensive delivery record accumulated over many years. 66 % The non-Japan sales ratio to total sales exceeded the final target of 60% for the plan Value Innovation 2017. 9.6 % Shiga Works (Main Campus) 30 % DAIFUKU CO., LTD. ANNUAL REPORT 2015 1 Our Business Financial Highlights Daifuku Co., Ltd. and consolidated subsidiaries Years ended March 31, 2015 and 2014 Consolidated Sales by Business (FY2014) Consolidated Sales by Industry (FY2014)

U.S. thousand LSP Electronics Automobile, Million yen % dollars ABH Other auto parts FY2014 FY2013 Change FY2014 FA&DA For the Year Airport Orders received ¥305,567 ¥276,831 10.4% $2,540,683 AFA Electronics eFA Commerce, retail Net sales 267,284 241,811 10.5 2,222,366 Operating income 14,883 12,556 18.5 123,750 Net income 9,810 7,740 26.7 81,572 Manufacturing and Provides systems to distributors and manufacturers in wide-ranging sectors. This business is actively Capital investment 7,532 10,446 (27.9) 62,632 Distribution Systems developing into global markets and is focusing on R&D expenditures 6,945 7,490 (7.3) 57,749 capturing growth opportunities in Asia. Sales were FA&DA also enhanced in North America through M&A. Cash Flows Factory & Distribution Cash flows from operating activities ¥ 6,295 ¥ 20,447 (69.2)% $ 52,345 Automation Cash flows from investing activities (5,846) (7,372) 20.7 (48,615) Free cash flows 448 13,074 (96.6) 3,729 Cleanroom Production Provides systems to the semiconductor and flat-panel Cash flows from financing activities (509) 1,045 (148.7) (4,233) display factories. More than 90% of sales are recorded Line Systems outside of Japan, including Asia and North America. With At Year-End highly advanced technologies required, Daifuku accounts Total assets ¥271,011 ¥249,531 8.6% $2,253,363 for a large share of the market. In semiconductors, firm eFA Working capital 91,187 87,070 4.7 758,192 e-Factory Automation sales of products, which are uniquely developed to accommodate the increase in semiconductor Net assets 111,521 99,690 11.9 927,261 miniaturization needs, contribute to earnings. Number of employees 7,746 7,349 5.4 Amounts per Share of Common Stock Automobile Production Provides systems for automobile production processes worldwide, mainly for Japanese, Detroit’s Net income per share (Yen and U.S. dollars) ¥ 88.59 ¥ 69.96 26.6% $ 0.73 Line Systems Big Three, Chinese, and South Korean automakers. Net assets per share (Yen and U.S. dollars) 972.75 875.14 11.2 8.08 In particular, sales of the service business, including AFA upgrades of existing factories, are strong. The Cash dividends per share (Yen and U.S. dollars) 22.00 18.00 22.2 0.18 Automotive Factory Automation system conveys car bodies between each assembly Ratios process at automobile factories. Operating income/net sales 5.6% 5.2% +0.4pt Net income/net sales 3.7 3.2 +0.5pt Airport Baggage Provides systems for airports, from check-in Return on shareholders’ equity (ROE) 9.6 8.6 +1.0pt counters for outbound flights to baggage claim Shareholders’ equity/total assets 39.8 38.8 +1.0pt Handling Systems areas for inbound flights. This business responds to demand for building new airports in emerging Notes: 1. Details are described in “Financial Section” from page 28. A PDF version containing notes to the financial statements is available on our website: www.daifuku.com ABH countries, as well as upgrades, services, and 2. The U.S. dollar amounts in this annual report are translated from Japanese yen for convenience only, at the rate of ¥120.27=U.S.$1.00, on the Tokyo Foreign Exchange Market on March 31, 2015. operations for airport facilities in the West.

Lifestyle Products Mainly provides car wash machines to gas stations Consolidated Financial Data and automobile dealers. With production in Japan, (Billion yen) (%) South Korea, and China, this business boasts top 300 10 LSP shares in the Japanese and South Korean markets. L Orders received L Net sales ­– Operating income ratio – ROE The business enhances eco-friendly functions, 250 including saving water and using plant-based liquid 8 detergents. 200 6 150 Provides high-end industrial personal computers, Electronics 4 controllers used in medical devices, computers built 100 in digital signage, and measuring/control systems Contec 2 for mega solar facilities through Daifuku’s subsidiary 50 Contec Co., Ltd. Contec is strengthening its business globally, mainly through M&A in North 0 0 America. FY2010 FY2011 FY2012 FY2013 FY2014

2 DAIFUKU CO., LTD. ANNUAL REPORT 2015 3 Daifuku’s Growth Path

Daifuku was established in 1937 with 150 employees and has 2009 Non-Japan sales ratio to total sales achieves 50% (Billion yen) steadily expanded its business domains, including systems for 2008 300 automobile manufacturing, factory automation (FA), and distribution Global financial crisis automation (DA). As a comprehensive manufacturer of material 2007 Sales exceed 200 billion yen handling systems, Daifuku has established a strong position in its industry. Aiming for further growth, the Daifuku Group is moving forward toward its goal of becoming a Value Innovator.

1997 Net Sales Asian currency crisis

200 1990 Collapse of Japan’s bubble economy 1990 Sales exceed 100 billion yen

1973 First oil crisis 1969 Market Listed on the First Section of the Tokyo, Osaka, Capitalization 100 and Nagoya Stock Exchanges 1962 Listed on the Second Section of the Tokyo Stock Exchange 1961 Listed on the Second Section of the Osaka Securities Exchange

0

1937 1956 1960 1970 1976 1980 1986 1990 1996 2000 2009 2012 2015

Japan’s Social Trends Rebirth of Japan Postwar economic boom Stable growth and collapse of Japan’s bubble economy Acceleration in globalization

Daifuku Milestones Founding era Beginning to move toward specialization Moving onto Entry into new business domains Leaping onto the global stage Evolving into in material handling systems mechatronics a Value Innovator

Overcoming the recession with medium-term Material Handling business plan and Beyond

1937–1956 1957–1976 1977–1986 1987–1996 1997–2000 2001–2009 2010–2015 • Founded as forge rolling • Delivers conveyor system to • Enters the car wash machine • Expands into DA and cleanroom • Establishes the eFA Division • Establishes global production • Establishes a U.S. holding machinery manufacturer for Japan’s first passenger car factory business fields for the semiconductor and LCD framework through proactive company ironworks and construction • Develops Japan’s first high-rise • Establishes the first global • Builds a global factory in Thailand (later flat-panel display) sectors investments • Logan Teleflex (UK) Ltd. and its • Expands operations into automated warehouse system subsidiary in the U.S. • Becomes ISO 9001 certified • U.S.-based Jervis B. Webb group companies join the Group manufacturing cranes and crane • Expands into bowling machines, • Changes the Company name • Opens the world’s largest Company joins the Group • U.S.-based Wynright Corporation ships automatic guided vehicles, and from Daifuku Machinery Works to exhibition center for material • Enters the airport baggage joins the Group material handling tools such as Daifuku (in katakana characters) handling and logistics handling systems business • Acquires an 80% share in racks and mesh pallets New Zealand’s BCS Group

DAIFUKU CO., LTD. ANNUAL REPORT 2015 5 Global Presence Top 20 Worldwide Materials Handling Systems Suppliers 2014 Source: Modern Materials Handling - April 2015 *1 Calculated from the earnings forecast announced in the third (Net Sales, U.S. million dollars) quarter for fiscal 2014 and exchange rates at the time. *2 Equity-method affiliate since July 2012 The Daifuku Group today operates in 22 countries and regions. The Group is actively 2,536 *1 expanding into global markets, centering on systems for manufacturers and Daifuku 2,487 A 1,051 distributors. Sales outside of Japan remained strong, mainly due to significantly 1,600 952 1,100 902 721 B D 712 increased sales in North America, with the ratio of non-Japan sales to total sales rising C E 627 F G 620 H 556 525 I *2 477 to 66% in fiscal 2014 (the year ended March 31, 2015), exceeding the final numerical Knapp J 340 K L 207 174 M N 170 168 O P 138 target of 60% for the four-year business plan. Daifuku will further aim to achieve a Q R non-Japan sales ratio of 70% for the final year (fiscal 2016) of the plan.

Management Targets by Area* (in the plan Value Innovation 2017) Daifuku’s Global Production Sites

Non-Japan Sales by Area (FY2014)

Europe 9.6% Other 3.8% Shiga Works (Main Campus) Komaki Works

North America 41.1%

Asia 45.5%

Daifuku America Jervis B. Webb

FY2012 FY2014 FY2016 Sales Sales Sales Wynright Jervis B. Webb Canada ¥51.4 billion ¥80.2 billion ¥120.0 billion* ASIA PACIFIC Shiga Works Daifuku Co., Ltd.

Global Factory Contec DTx Daifuku (China) Automation FY2012 FY2014 FY2016 Group Company Sales Sales Sales Global Branch ¥9.0 billion ¥17.0 billion ¥15.0 billion* EUROPE Daifuku (Suzhou) Cleanroom Daifuku (China) Manufacturing Automation

FY2012 FY2014 FY2016 Sales Sales Sales ¥39.3 billion ¥72.5 billion ¥97.0 billion* Daifuku Korea Clean Factomation Non-Japan Sales, Ratio to Net Sales NORTH AMERICA (Billion yen) (%) 240 80

180 70 Hallim Machinery Taiwan Daifuku

120 60

60 50

FY2012 FY2014 FY2016 FY2012 FY2014 FY2016 Taiwan Contec Daifuku Singapore 0 40 Sales Sales Sales Sales Sales Sales (FY) 2012 2013 2014 2015 2016 ¥97.0 billion ¥90.9 billion ¥100.0 billion* ¥3.9 billion ¥4.4 billion ¥5.0 billion* (Estimate) (Target) JAPAN LATIN AMERICA a a a Non-Japan sales Ratio to net sales

Daifuku Thailand Daifuku Logan

6 DAIFUKU CO., LTD. ANNUAL REPORT 2015 7 Message from the CEO

How Value Innovation Sets Us Apart To win trust and capture growth opportunities, the Daifuku Masaki Hojo Group is continuing its initiatives to always identify markets President and CEO and never dodge issues.

Fiscal 2014, the year ended March 31, 2015, was the developments and meeting deadlines, while pursuing The Internet of Things (IoT) is bringing higher demand halfway point in our four-year business plan Value high-quality standards through stable system utilization for electronic devices and high-definition TV panels, and Innovation 2017. Performance for the year was robust, rates. Our initiatives have earned the strong trust of investment in the semiconductor and FPD sectors is with orders and net sales rising for the fifth consecutive customers, and this has strengthened our position in core rising mainly in China, Taiwan, and South Korea. Our year to the highest levels in our history. We have, businesses, I believe. annual sales in this field have been from 45 to 60 billion therefore, revised our management targets for fiscal Meanwhile, in manufacturing and distribution systems, yen in recent years; however, we now expect sales of 2016, the final fiscal year of our business plan, upward, demand for the introduction of high-end systems is more than 80 billion yen in fiscal 2015, our record-high, as including an increase of 60 billion yen in the net sales continuing in the distribution automation (DA) business and market conditions are better than anticipated. If, however, target, to 340 billion yen. in emerging sectors in manufacturing. In particular, the DA we regard this as temporary and assume it will not be business includes various fields, and the composition of recurring, I believe that structuring the framework for the Performance in Fiscal 2014 our customer base changes with the times. In other “next stage in growth” over the remaining two years of the We reported increases in sales and income for the fifth words, this business area will be perpetually growing. In business plan will become a very significant issue. consecutive year, marking record orders and sales. this business, we apply our market creation business During these two years, I want to create a company Consolidated orders in fiscal 2014 rose 10.4% from the model. At Daifuku, looking ahead of markets, we develop that will develop new markets, new products, and new previous year, to 305.5 billion yen; net sales increased and provide products that will be needed and technologies business models to generate future profits. This will involve 10.5%, to 267.2 billion yen; operating income was up that will be in demand. This has placed us in a superior applying our know-how, such as non-contact power 18.5%, to 14.8 billion yen; and net income rose 26.7%, to competitive position in the DA market and is a main factor supply, into individual devices and units. The challenge for 9.8 billion yen. We have now cleared our business plan in boosting our overall performance. manufacturers is to increase the lineup of high-margin target for the first two years of a 5% operating income (  See page 13 for major topics in fiscal 2014) products with low unit prices to be sold in volume. ratio. Fiscal 2014 positively showed us that the foundation of our existing businesses has strengthened. Four-Year Business Plan Revisions to the Plan Targets Our three core businesses, which are systems for the Progress is ahead of expectations. We will make further Original Targets manufacturing and distribution sectors, the automobile leaps ahead through systems development. plan targets after revisions sector, and the semiconductor and flat-panel display Although we formulated our four-year business plan Net sales ¥280 billion ¥340 billion (FPD) sectors, were the keys to growth. As our customer only two years ago, because of the improved business Operating income ratio 7% ¥21 billion bases for automobile production line systems and performance due to our efforts toward increasing market (amount) (to surpass the record-high ¥20.6 semiconductor/FPD production line systems are largely penetration and creating new markets, we will attain our billion for fiscal 2008) fixed, our task is to remain close to those customers and net sales target one year ahead of schedule. Accordingly, ROE — 10% strengthen our hold in these markets. We have been we have revised the management targets of the plan Non-Japan sales ratio 60% 70% satisfying customer needs through high levels of system upward. to total sales

8 DAIFUKU CO., LTD. ANNUAL REPORT 2015 9 Message from the CEO

With regard to the IoT, what our customers need, automobile production line systems in North America and an installation site in the United States, I advised whether it be systems for delivery centers or production semiconductors/FPD production line systems in Asia employees to have three-way teleconferences among lines, will not be uniform. The only common themes are benefited earnings. production, technological, and installation teams in analyzing Big Data and aiming for more productive While sales are growing favorably, issues to be Japan and the United States on a weekly basis. I also systems. The difference in our customers’ needs is the addressed still remain in increasing profitability. In this encouraged them to continue to communicate with one issue we must address. In Daifuku’s corporate culture, regard, Daifuku will strive to accomplish the following two another and talk about even small issues or even if no rather than just think about issues, we visit our initiatives. special issue needs to be discussed. Work at the customers, interact with them, exchange ideas, and installation site improved after they implemented this. 1) Improving operational efficiency and productivity, and come up with solutions working with them. Through this Next, I would like to summarize the status of operations pursuing comprehensive project management and interactive process, the overall picture becomes clearer. by geographical area. collaborative effects among non-Japan affiliates that Rather than regarding the IoT as a general concept, we In North America, sales of manufacturing and have joined the Group in recent years can understand and provide it as a specific service to our distribution systems expanded significantly, backed by 2) Enhancing sales and production frameworks for customers. We are aware that this can become one of the effect of M&A, and demand for new installations and Our position in Europe is not as strong as would be manufacturing and distribution systems in Southeast our strengths that competitors cannot replicate. facility upgrades for automobile production lines remained desirable, because we are dependent on some regions Asia favorable. In fiscal 2014, sales in the region expanded and industries. We are considering further market Performance and Strategy by Region Another important issue is eliminating failures at project about 25%, to 72.5 billion yen, representing 41.1% of development through friendly acquisitions of leading local Expanding in all regions, non-Japan sales now account installation sites. Rather than say that there are no our overall non-Japan sales. I believe that, because of companies. for two-thirds of overall net sales. problems whatever at the working level, issues always the differences in market needs between Japan and the Daifuku’s sales outside of Japan during fiscal 2014 arise at installation sites. What we do next, after the United States, to show a profit in these businesses, it Aiming for Sustained Growth amounted to 176.4 billion yen, an increase of 19.8% over issues have emerged, is vital. Personally, I enjoy visiting will be necessary to structure frameworks that make it Implementing farsighted initiatives that draw on Daifuku’s the previous fiscal year. This represented 66% of overall installation sites, because, compared with listening to possible for staff who understand local business practices strengths net sales, up from 61% in fiscal 2013. Outside of Japan, others describe matters, I can understand quickly where to be involved throughout the process. The ideal We position corporate governance as an important theme manufacturing and distribution systems as a whole difficulties are occurring, what new initiatives we have to approach would be for U.S. staff who emphasize cost for a global enterprise. Looking ahead, we will actively expanded steadily. In addition, robust demand for take, and how much trouble is being caused. In a visit to control and Japanese staff who focus on precise implement measures to strengthen governance at our manufacturing to collaborate in developing the market. global subsidiaries. In specific terms, the processes of In Asia outside Japan, sales in fiscal 2014 rose about internal control and internal auditing differ from one Non-Japan Sales by Region 9%, to 80.2 billion yen from the previous fiscal year. A subsidiary to another; however, I believe all our

Fiscal 2013 Fiscal 2014 major contributing factor was the increase in investments subsidiaries across the globe, as members of the Daifuku Region Net Sales Composition Net Sales Composition by the semiconductor and FPD sectors in China, Taiwan, Group, to be fully compliant with laws and regulations. (Billion yen) (%) (Billion yen) (%) and South Korea. Another important theme is diversity. Local nationals North America 57.5 39.2 72.5 41.1 In South Korea, sales remained favorable, underpinned have been appointed as presidents not only of the Total for Asia outside Japan 73.5 49.9 80.2 45.5 by major projects for the e-commerce and other sectors. companies that joined the Group through acquisition but Breakdown Along with growth in national income in the Asian region also of Daifuku America Corporation and Daifuku Canada South Korea 22.2 15.1 30.5 17.3 as a whole, consumer needs are evolving, and my Inc. On the other hand, in Asia outside Japan, in part China 28.3 19.3 30.5 17.3 impression is that the need for high-end distribution because the principal customers of the subsidiaries in this Taiwan 7.7 5.2 6.9 3.9 systems, as typified by systems for the e-commerce region are Japanese companies, all of these companies Thailand 7.4 5.1 5.4 3.1 sector, is rising. Daifuku’s high-end systems have are headed by Japanese presidents. However, since Other 7.7 5.2 6.7 3.9 overwhelming strengths and excel in speed, accuracy of orders from local companies in China and elsewhere are Europe 9.5 6.4 17.0 9.6 Latin America 4.8 3.3 4.4 2.5 shipments, and on-schedule deliveries. expected to rise going forward, I believe it will be essential Other 1.8 1.2 2.1 1.3 to appoint local management. Total 147.2 100.0 176.4 100.0

Note: Since figures of less than 10 million yen have been truncated, the sums of figures by region may differ from the overall total.

10 DAIFUKU CO., LTD. ANNUAL REPORT 2015 11 Message from the CEO

We also consider it to be extremely important to increase followed by a 15 yen per share year-end dividend, bringing Value Growth Engine Major Topics in Fiscal 2014 diversity at our workplaces where everyone is able to use the total dividend for the fiscal year to 25 yen per share. New Zealand’s BCS Joins the Daifuku Family their capabilities to the fullest. For Daifuku, one theme is To strengthen our financial position, we have issued In December 2014, Daifuku purchased 80% of the outstanding shares how it can support the activities of all employees. convertible bonds and, as mentioned previously, we have the BCS Group Limited (headquartered in New Zealand), which With respect to corporate social responsibility (CSR) set a goal of a 10% return on equity in our business plan became a subsidiary of the Daifuku Group. BCS is the leading activities, Daifuku’s largest establishment, which is located and will aim to maintain and improve our bond rating of company in sales in the Oceanian market for airport baggage handling in the vicinity of Lake Biwa, Japan’s largest body of fresh single-A. We have also set a goal of having Daifuku’s systems and is expanding its business activities into Southeast Asia. water, and is surrounded by a verdant area, has had a stock included in the JPX-Nikkei Index 400 and are BCS offers IT-based solutions through its software that incorporates a major impact on our view of CSR. Under the Company’s working to raise our three-year average ROE, increase software package with three functions of SCADA,* 3D simulator, and CSR policy, our employees have a high level of awareness our three-year accumulated operating income, and raise testing tool. With the entry of BCS into the Group, Daifuku now has the toward nature and the environment. our market capitalization. network needed for intensive coverage of Oceania, where it has (  See page 3–4 for trends in our market capitalization) delivered only a few systems thus far, and the rest of the Asian market, Allocation of Income where expansion in airport construction is forecast. Daifuku will seek Striving to attain sustained growth as a company capable The Management and Corporate Culture benefits from the collaboration of BCS and other Group companies of generating a 10% ratio of operating income to sales I Aim to Cultivate that cover the airport baggage handling systems business in the North We believe that the ideal allocation of income is to provide Differentiating Daifuku as an enterprise that never dodges America and Europe regions, and the expansion into the logistics one-third each to employees and shareholders, and use issues and always innovates for greater customer value systems business in BCS’s sales territory. * SCADA, standing for supervisory control and data acquisition, is a type of control and monitoring system. the remaining one-third for investing in Daifuku’s future In the Daifuku corporate culture, employees are earnest growth. In the medium-to-long term, we will give and sincere in their work. No matter what difficulties we North American Holding Company Renamed and Brands Unified consideration to the balance between dividends to encounter, we never dodge them, but help one another. In January 2015, the name of Daifuku Webb Holding Company was shareholders and investments for growth; however, at We overcome issues that arise at installation sites, and changed to Daifuku North America Holding Company (headquartered present, we consider preference should be given to always endeavor to delight our customers by delivering in Michigan, U.S.A.). Four affiliates, including Wynright Corporation, are investment for growth. on time and starting up their facilities on schedule. I now operating under Daifuku North America and expanding the scope Under our four-year business plan Value Innovation believe this has led our performance in serving customers of their operations. The brand name DAIFUKU WEBB, used heretofore, 2017, we have indicated that we will aim for sustained and society. Outside of Japan also, Daifuku has won a will be replaced, and all products will bear the DAIFUKU brand, with growth in dividends per share and then for a 30% dividend reputation as an enterprise that will always do things to the aim of strengthening the DAIFUKU brand at the global level, payout ratio from consolidated net income in the medium- the very end. This corporate culture is a philosophy that including North America, where future growth is expected. Wynright’s robot technology playing an active role in the DA sector to-long term. Based on this policy, we declared a dividend Daifuku has always treasured. So long as we have our of 22 yen per share for fiscal 2014. For fiscal 2015, we are corporate principle of “never dodging issues, but address planning to pay an interim dividend of 10 yen per share, them forthrightly while helping one another,” I am Innovative Temporary Storage and Sortation System “SPDR convinced that we can overcome even the roughest times (Pronounced Spider)” Developed Daifuku developed the SPDR temporary storage and sortation system that the future may bring. I would like us to increase the Cash Dividends per Share to meet the workplace logistics needs of automobile and automotive strengths of the Daifuku Group even further to respond to (Yen) parts manufacturers. Marketing of this system began in December 25 the expectations that you, as shareholders who have 25 2014. The system adopts an original structural design, and it is the first 22 supported us, have for our future performance. system of its kind in the world that makes it possible to handle cases 20 18 15 15 of varying sizes. The system is also designed to respond to individual 15 Masaki Hojo facility needs, such as the efficient use of space, short installation and 10 President and CEO start-up time, and allowing for layout changes after installation. This Daifuku Co., Ltd. 5 system makes the receipt, storage, and shipment of parts, which formerly depended on human labor, much more efficient and flexible. 0 (FY) 2011 2012 2013 2014 2015 (Projected)

12 DAIFUKU CO., LTD. ANNUAL REPORT 2015 13 Special Feature Planning & Consulting Engineering Value Growth Engine

Daifuku provides material handling systems that store, convey, and sort items efficiently to customers spanning a wide range of industries worldwide. Daifuku offers the best solutions that are suited to the specific characteristics of various industries and markets, employing comprehensive capabilities ranging from consulting and structuring systems to after-sales service that supports the stable, long-term operations of its systems. Daifuku is continuing to boost the competitive edge of its customers by providing complete support for its systems. Evolving from a manufacturer of material handling systems to a systems integrator Daifuku’s complete support Mahindra & Mahindra (India): Planning & Installation & After-Sales Emphasis on Providing Comprehensive Systems Consulting Design Production Engineering Operation Service Daifuku does more than just manufacture material handling systems and Shortening Lead Time by Making equipment. Daifuku is active in a full spectrum of business fields, from Use of Vertical Open Space production to distribution and services. Daifuku discusses with its customers Mahindra & Mahindra Limited, one of the largest automobile manufacturers to clarify the real issues they need to address, and is, therefore, able to offer in India, manufactures about 200,000 the best solutions for responding to next-generation issues. Under its four- cars a year in five models on mixed year business plan covering the period through fiscal 2016, Daifuku aims to production lines. In 2013, Daifuku evolve from being a manufacturer of material handling systems to securing a delivered a painted body buffer system that uses a unit-load automated superior competitive position as a Value Innovator. warehouse system. The system operates as a temporary storage for the painted car body and retrieves it to the Creating the Best Customer Solutions with Real Simulations assembly line in the proper order. This Daifuku contributes to securing a superior competitive edge for its customers system features the use of vertical by visualization of their whole systems. Specialist engineers prepare plans that open space to store the body instead of the conventional method of storing meet customer requests and then create a working computerized model that on flat conveyors. Under the previous simulates systems in actual operation using Daifuku’s original simulation method, the lead time to send the system. By repeating this simulation under various conditions, Daifuku body down the assembly line was structures the optimal and best systems for its customers. a maximum of 30 minutes, but the automated warehouse makes it possible to pinpoint and deliver the Daifuku’s Solutions body when and where it is needed. This Sector Item Handled Challenge Solution shortens the lead time to a minimum of Pharmaceutical Medicines Streamlining of small-lot Automatic supply to a digital deliveries picking line two minutes. Food Beverages Effective use of space plus labor Automated cold storage system saving linked to production lines Food All types of Dealing with increased demand Automation of storage/retrieval food products in logistics and aging facilities operation Distribution Toys Need for increasing sorting Introduction of automated sorters capacity and eliminating human and warehouse management error systems Distribution Logistics Reduction of logistics costs and Automation and acceleration of human error warehouse operations Manufacturing Machinery Shortening of operation time and Introduction of automated maintaining material quality warehouse and inventory management system Agriculture Rice Maintaining quality in storage Increased storage capacity and increased emphasis on inventory management Mahindra & Mahindra’s automotive plant

14 DAIFUKU CO., LTD. ANNUAL REPORT 2015 15 Special Feature

Installation After-Sales Design Production & Operation Service

Drawing on our extensive experience and Building brand power based on the trust continuing to innovate by applying and reputation for reliability gained from existing technologies an impressive record of installations

Customer Needs Are the Starting Point Daifuku’s High-Rise Research Facility: Trust in the Daifuku Brand Built on Thorough After-Sales Service Quake-Absorbing Racks: One of Daifuku’s strengths is its capability to develop and offer the best Solving Problems on High-Rise What customers need, first of all, are systems delivered and operating on Bolstering Business Continuity comprehensive systems to meet customer requests. These requests include Construction time and capable of performing up to specifications. Next, they need the following Natural Disasters the environment where the distribution point is located, special features of The high-rise research facility, which stable operation of their systems. After delivering systems, Daifuku’s staff When earthquakes occur, making a tests 40m high automated warehouse rapid recovery is important. For items to be handled, the frequency of shipments, and the budget for provide support* tailored to customer needs based on thorough product stacker cranes, has developed a sway- example, there is a greater need to investment in the systems. To respond to today’s growing attention to control technology. knowledge. In the case of automobile production line systems, the origin of reliably provide pharmaceutical corporate social responsibility, Daifuku also proceeds to develop products For more storage quantity in limited its business since installing Japan’s first-ever conveyor system at an auto supplies after a disaster happens. This and systems that give due regard to safety and the natural environment. spaces, taller warehouses are needed. factory in 1957, Daifuku has compiled an impressive record of installations is why Daifuku developed its quake- But, as these structures increase in absorbing storage racks that dampen and accumulated know-how on facility upgrades. This support capability height, sway of the upper part of the impact of earthquake shocks and cranes increases, and items cannot be continues to lead to increased orders. Daifuku’s capabilities are especially prevent items from falling. As the Responding to Changes in the Industrial Structure stored and retrieved until sway evident when it comes to the challenging level of work that requires importance for risk management has Daifuku is continuing to innovate by improving and combining its subsides. This has an impact on the equipment modifications and expansions without stopping the existing increased in recent years, these racks accumulated expertise and technologies and applying these to new industrial cycle time. are being used. Daifuku believes that production lines. fields. In the 1980s when demand for semiconductors rose sharply, Daifuku Amid increased demand for larger responding to such needs is one of its and higher-throughput automated * Examples of this support include Daifuku’s intensive on-site service, which keeps factories running 24 hours a day, 365 missions, as the leading manufacturer developed overhead monorail systems for semiconductor cleanroom days a year, and the upgrade and retrofit services to accommodate changes in auto models and production plans in warehouse systems for large distribution automobile factories. In the case of airport baggage handling systems, Daifuku supplies not only the systems but also of material handling systems, and part factories, an upgrade from the “Telelift,” which was used for transporting centers, Daifuku’s own sway-control provides airport facility operation and maintenance services. of its social responsibility. Daifuku’s medical records in hospitals and books in libraries. In addition, Daifuku technology solves these problems. capabilities for restoring operations at developed cleanroom storage systems for flat-panel display factories, using Since this technology can also be customer sites after disasters, such as applied in Europe and the U.S., where Entering the U.S. Market together with Japanese Automakers earthquakes and floods, have received its conventional automated warehouse system technologies, to meet restrictions on the height of these The capabilities of Japanese manufacturing have spread around the globe. a high appraisal. increased demand in the 2000s. Also, as the economy and society change, structures are less strict than in Japan, Daifuku systems support these capabilities from the perspective of material Daifuku’s developments for newly emerging industries have been highly the work of the high-rise research facility handling. In the 1980s, when Japanese automakers entered the North Concept of Quake-Absorbing Racks appraised. These include is becoming increasingly important. Patents Registered by Region American market, Daifuku set up a subsidiary to support automobile Conventional rack Quake-absorbing rack systems for convenience store (Number) production in the market. For more than 30 years since then, Daifuku has 3,000 chains, agricultural produce Sway is reduced consolidated a strong base in North America by compiling an extensive to 1/5th of shipments, pharmaceutical conventional installation record in the market and also providing systems to Detroit’s Big rack wholesalers, 100-yen (or US$1) 2,000 Three automakers. Favorable automobile sales are projected to continue in the stores, and e-commerce or Assumption: U.S., and Daifuku will draw on its long experience in the market to upgrade the Strong online stores. magnitude 6 1,000 aging facilities and undertake new projects. The rack sways The rack itself reduces widely, and stored its sway to avoid falling items easily fall. of stored items. 0 (FY) 2001 2005 2009 2013 2014 a Japan a U.S.A. a South Korea a China a Taiwan a Europe a Other 16 High-rise research facility at the Shiga Works DAIFUKU CO., LTD. ANNUAL REPORT 2015 17 Corporate Governance

Daifuku also holds the Management Advisory Meeting* Audit and Supervisory Board members conduct audit and gathering information. Along with the previously mentioned Principal Initiatives (five times in the fiscal year ended March 31, 2015), which supervisory activities in accordance with audit plans outside director, the Tokyo Stock Exchange has been notified comprises all directors with Audit and Supervisory Board formulated at the beginning of the fiscal year. In the course of that two of the outside Audit and Supervisory Board members, Daifuku is fulfilling the sustained growth of its corporate value members in attendance, to discuss important management their duties, Audit and Supervisory Board members attend Isao Kitamoto and Hiroyuki Torii, are independent officers. and the corporate social responsibility (CSR) based on the key matters and make recommendations to the Board of key meetings, including Board of Directors’ meetings and tenets of its management philosophy: to “provide the best Directors. officers’ meetings, and visit to monitor financial activities at Accounting auditor solutions to benefit the global markets and the development of The corporate officer system* is in place to accelerate various operating divisions in factories, sales offices, and Daifuku provides proper management and financial society” and “focus on healthy, growth-driven global management management decision making and execution. The Company Group companies. To promote coordination and information to be audited from a fair and unbiased under a diverse and positive corporate culture.” The Company currently maintains 19 corporate officers, including those effectiveness in auditing, Audit and Supervisory Board perspective by the accounting auditor, ceaselessly strives to improve its corporate governance, the serving concurrently as directors. members exchange information and conduct business audits PricewaterhouseCoopers Aarata, with which the Company

platform supporting the realization of this mission. * Corporate officer systems and Management Advisory Meetings within companies that in coordination with the Internal Audit Department, which is signed an audit contract. have an audit and supervisory board are voluntary corporate bodies, not specified in Japan’s Companies Act. independent of the regular business operations, and, together with accounting auditors, make inspection visits, Management Decision Making, Supervision, Outside directors exchange opinions about audit plans and results, and attend Board Member Compensation and Business Execution Framework Two outside directors provide insightful advice and evaluation tests of internal control systems. recommendations to the Board of Directors based on At Daifuku’s June 2006 General Meeting of Shareholders, a Board of Directors their abundant experience and extensive knowledge in Outside Audit and Supervisory Board members resolution was passed limiting the total annual compensation Daifuku’s Board of Directors consists of 10 directors, international trade laws, corporate legal affairs, finance, and Three outside Audit and Supervisory Board members— of directors (excluding the salaries of staff) to 700 million yen, including two outside directors. The directors’ term of office accounting. Harumichi Uchida, Isao Kitamoto, and Hiroyuki Torii—bring and that of Audit and Supervisory Board members to 110 is one year, and each Board member’s mandate is reviewed diverse perspectives to the Audit and Supervisory Board by million yen. Director and Audit and Supervisory Board yearly at the General Meeting of Shareholders. The Board Audit and Supervisory Board exchanging opinions with the full-time Audit and Supervisory member compensation in fiscal 2014 is as shown in the of Directors pursues decision making on important Daifuku maintains an Audit and Supervisory Board made up Board members, attending Board of Directors’ meetings, and following table. No individual received total compensation on management matters, including management policies. The of five Audit and Supervisory Board members, three of whom a consolidated basis of 100 million yen or more, nor did any Board of Directors’ regular meetings are held once a month, are elected from outside the Company. The Audit and individual outside officer receive compensation as a director Activity of Outside Directors while extraordinary meetings are held as needed (six times in Supervisory Board met on six occasions during the fiscal year or Audit and Supervisory Board member from Daifuku’s Board meeting Name Activity the fiscal year ended March 31, 2015). ended March 31, 2015. attendance subsidiaries besides that shown in the table. Noboru Regular: 12/12 times Provides insightful advice and Corporate Governance Structure Kashiwagi Special: 6/6 times recommendations to the Board of Directors based on his abundant Compensation for Board Members experience and extensive knowledge (amount paid in the fiscal year ended March 31, 2015) General Meeting of Shareholders (Chair: President) in corporate legal affairs and Elect international trade laws. Elect Elect Number of Category Compensation individuals Audit & Supervisory Board Yoshiaki Regular: 7/9 times Provides expert advice and Audit & Supervisory Board Board of Directors (Chair: President) Ozawa Special: 4/4 times recommendations to the Board of Directors 12 435 million yen Members (full-time /outside) Delegate Directors based on his extensive (Outside directors) (2) (24 million yen) Appoint Appoint knowledge in finance and accounting Report Inform and experience working outside of Audit and Supervisory Board 6 86 million yen Officers Meeting Compliance Committee Japan. members (3) (30 million yen) Internal reporting Deliberate (Outside Audit and Supervisory Audit Outside Counsel President & CEO Export Control Committee Board members) Deliberate Management Activity of Outside Audit and Supervisory Board Advisory Meeting Central Safety & Hygiene Committee Total 18 521 million yen Collaborate Members (Outside officer total) (5) (54 million yen) Report Direct Board meeting Name Activity attendance

Harumichi Board of Directors Provides expert advice and Uchida Regular: 11/12 times recommendations to the Boards as COO CFO & CRO Special: 6/6 times a prominent lawyer. Enhancing Corporate Governance Effectiveness Audit and Supervisory Corporate Lawyer Delegate Board: 6/6 times Accounting Auditor Operations: Isao Kitamoto Board of Directors Provides insightful advice and FA&DA Regular: 12/12 times recommendations as a journalist to Daifuku develops systems mainly for its internal control, eFA Special: 6/6 times the Boards, based on extensive Internal Audit Dept. compliance, and risk management with the aim of raising the AFA Audit and Supervisory experience working outside of Board: 6/6 times Japan. ABH effectiveness of corporate governance as well as corporate LSP Hiroyuki Torii Board of Directors Provides insightful advice and Regular: 12/12 times recommendations as a journalist to trustworthiness and operational efficiency. Daifuku North America Holding Company Contec Special: 6/6 times the Boards, based on a wealth of Japanese Affiliates Audit and Supervisory knowledge in the science and Board: 6/6 times technology fields. Non-Japanese Affiliates CSR Division Finance & Accounting Division Enhancement Environmental Management Committee Mental & Physical Health Committee Promotion Information Security Committee Committee Disclosure Safety & Hygiene Management Division Corporate Business Development Division Internal audit Delegate audits of accounting & internal control 18 DAIFUKU CO., LTD. ANNUAL REPORT 2015 19 Corporate Governance Interviews with Outside Directors

Internal control system strengthens emergency response structures to communicate Providing Advice as a Specialist Daifuku operates its internal control system in compliance with within the Group in a speedy and appropriate manner. Japan’s Companies Act. The Internal Audit Department, which Consequently, in its fiscal 2014 internal control report, in International Transactions plays a major role in the Company, supports every operating based on the Financial Instruments and Exchange Act of My experience includes international transactions at a leading general trading company for about 30 years and then conducting division to build their internal control system mainly for ensuring Japan, Daifuku once again evaluated its internal control research at the University of Tokyo and Chuo University on reliable financial reporting, by assessing risks in various business systems over financial reporting as effective. international transactions law and international economics law. In activities. In addition, the department conducts integrated Daifuku’s meetings of its Board of Directors, I draw on this expertise management using Plan-Do-Check-Act cycles on internal and knowledge, and provide advice based on differences in the legal control systems by evaluating the internal control developments Information Disclosure and IR Activities systems of various countries. In my position as independent outside and operational effectiveness conducted by internal inspectors, director, I believe that the members of Daifuku’s management team who were appointed from non-Internal audit departments. For its shareholders and investors, Daifuku conducts timely live up to high standards of professionalism and ethics, and that Daifuku is a sound and reliable company. and appropriate disclosure of information in accordance Daifuku is a leading company in the material handling industry, Compliance with laws and regulations, through its IR (Investor Relations) which is a growth sector, and is required to grow at a faster pace Daifuku has established a Compliance Committee chaired by Department. For security analysts and institutional investors, than this industry as a whole. For this reason, its international Noboru Kashiwagi Outside Director the president, of which all directors are members, to monitor the Company conducts IR activities, such as quarterly results corporate strategy is especially significant. I believe that the global and supervise legal and other compliance initiatives. The briefings, additional company information sessions as strategy that Daifuku currently implements, which includes proactive combined CFO (chief financial officer) and CRO (chief risk needed, and conference calls, and responds to individual M&A, is moving forward in the right direction. As part of upcoming issues to be addressed, Daifuku will merge with advantages in officer) communicates with all directors and employees to requests for information through the department. cultures of the countries that it has entered. In addition, the ensure compliance with the Corporate Code of Conduct. In addition, Daifuku has sent notice of the Ordinary General Company will enhance post-merger integration with the companies it As part of its efforts, the Company holds training sessions Meeting of Shareholders and posted Japanese and English has acquired to realize maximum collaborative effects. It is vital to companywide to raise awareness of compliance in all of its versions of the notice on its website earlier than last year. train and give international experience to younger staff members who employees. In addition, as a countermeasure against the global For individual investors, Daifuku broadly pursues transparency have the potential to take an active role in Daifuku’s global activities. risk of violating laws, the Company has established basic through tours of its facilities, various IR events and publications, company rules and subsidiary rules detailing various measures and timely information disclosure on its website. Contributing to the Sustained Growth of and procedures to comply with competition and bribery laws. Daifuku and Working to Increase Corporate Daifuku has also distributed a message from the president conveying the importance of compliance to all employees. Corporate Governance Code Value in the Medium-to-Long Term One of the duties for outside directors is to provide advice that will contribute to sustaining Daifuku’s growth and increase its corporate Risk management Daifuku will continue to seriously discuss the essence of Japan’s value in the medium-to-long term. Another duty, when making Daifuku implements risk management measures through Corporate Governance Code, which was applied in June 2015, decisions in the Board of Directors’ meetings, is to monitor the CSR Division under the control of the CRO. Under the to increase its corporate value. As one of its efforts, the Company management activities while keeping in mind the existence of a wide Company’s risk management rules, the division conducts risk added the targeted ROE as a management indicator to its four- range of stakeholders. I worked in the United States for six years, assessments across the Daifuku Group once a year. year business plan Value Innovation 2017. The Comapny will and, from my perspective as a certified public accountant in Japan According to the level of risk criticality, related divisions take submit its renewed report that contains its activities to the Tokyo and the United States, as well as that gained in my experience measures to mitigate and minimize risks. Daifuku also Stock Exchange to meet the Code before the end of 2015. lecturing accounting and management analysis courses in colleges and universities, I want to fulfill my responsibilities as an outside Yoshiaki Ozawa director. At Daifuku, the opinions of the members of Daifuku’s Board of Outside Director topics Directors are taken into account fairly, and the Company is managed soundly, in line with the Company’s corporate philosophy. The Role-play training for large-scale disasters sincere energy or leverage that Daifuku shows in recovery efforts following natural disasters has earned a high appraisal among In September 2014, Daifuku implemented a role-play training that simulated a scenario customers and encourages them to continue placing orders with of a large earthquake at the Shiga Works for the first time, aimed at raising employees’ Daifuku. Looking ahead, to further enhance the globalization and response capabilities in emergency. About 1,700 employees from all factories diversity of the Company, I will be providing advice from the participated in the practical training, which responds to unexpected events. This training perspective of hiring regardless of nationalities and genders as well will be regularly held to increase such response capabilities in the event of disasters. as offering useful information to investors.

20 DAIFUKU CO., LTD. ANNUAL REPORT 2015 21 Corporate Social Responsibility (CSR)

Daifuku’s CSR Outreach The Daifuku Group believes that the basic principles of CSR are to While contributing to society through its business activities, Daifuku is further deepening build a symbiotic relationship with its stakeholders and to practice the communication and building relationships of trust with stakeholders. Group’s Corporate Policies Structure through its corporate activities.

Customers Employees Customers require stable operation after their material Daifuku contributes to society by maintaining and creating handling systems and equipment are delivered. Daifuku employment through its sustainable growth and stable aims to increase customer Service Sales profits. In addition, under Employees “A company that supports society and the future” (Billion yen) (Number) satisfaction with highly reliable policy of respecting human 7,746 100 8,000 7,349 To achieve this desire, we are engaging in the themes outlined below. 81.3 6,678 services, rapid recovery 75.9 dignity, Daifuku strives to 75 6,000 through quick responses, and 58.7 further create a worker-friendly • Provide high quality products • Strengthen risk management improved technologies to 50 environment and promote 4,000 and services • Respect human dignity maintain “nonstop logistics.” 25 diversity within the Daifuku 2,000 • Nurture relationships of trust Six (human rights, labor practices, with our suppliers initiatives safety, health) 0 Group. 0 (FY) 2012 2013 2014 (FY) 2012 2013 2014 • Create good relations with • Contribute to the environment communities through corporate activities Shareholders and Investors Suppliers Daifuku endeavors to improve its corporate value and return Daifuku undertakes manufacturing, installation, and services

Customers an appropriate level of profits to its shareholders. Under its in cooperation with its suppliers, in accordance with its basic Employees four-year business plan Value Cash Dividends procurement policies and green procurement guidelines, Suppliers (Yen) Innovation 2017, Daifuku aims particularly keeping safety in mind. The Company also 24 22 to achieve sustainable growth 18 endeavors to establish and sustain win-win relationships. 18 Shareholders 15 Communities Company and in dividends per share and a Creed Investors medium- to long-term dividend 12 Management Philosophy payout ratio of 30%. 6

0 Brand Proposition (FY) 2012 2013 2014

Brand Message Communities Daifuku Corporate Policies Structure Daifuku has a policy of “contributing to the creation of sound, safe, and comfortable communities as a responsible member of local communities,” as stated in its Corporate Code of Presentation on production trends Conduct. Daifuku, as a good corporate citizen, is a company that contributes to society through sustainable growth in profitability and fulfills its duty to pay taxes. In addition to undertaking CSR activities throughout the Daifuku’s CSR Group, we have formulated our medium- to long-term • A comprehensive and long-term policy that concisely captures our views on CSR policy, Daifuku’s CSR, and concrete measures in our topics • Specifies the six initiatives and declares the implementation of CSR Action Plan; having clearly laid out a vision, we our Corporate Policies Structure in corporate activities as we are further promoting CSR activities and aim to comply coexist with our stakeholders Joining the United Nations Global Compact with social demand for disclosure of non-financial information in accordance with the Global Reporting CSR Action Plan In April 2014, Daifuku joined the United Nations Global Compact (UNGC), which sets forth • A plan that sets medium-term targets in line with the six Initiative (GRI) G4 international guidelines. 10 principles in the area of human rights, labor, the environment, and anti-corruption. The initiatives and defines concrete initiatives UNGC is an initiative for corporations to voluntarily participate in creating a global framework • Discloses details and results of initiatives for each fiscal year in to achieve sustainable growth. www.unglobalcompact.org the CSR report and website

22 DAIFUKU CO., LTD. ANNUAL REPORT 2015 23 Corporate Social Responsibility (CSR)

Globally Sharing Corporate Philosophy and Policies Environment

Daifuku has actively expanded its business into global markets through various activities, including M&A. In the Daifuku aims for reliable manufacturing in harmony with the natural environment and biodiversity while striving fiscal year ended March 31, 2015, the ratio of employees who work in non-Japan affiliates exceeded 60%. to lower its environmental impacts in every aspect of its business activities. Daifuku now has global branches and affiliates in 22 countries and regions. With the aim of developing a sense of Group unity with high motivation, Daifuku is focusing on fostering global affiliate staff, who have a diverse Daifuku Environmental Vision 2020 Daifuku Eco-Products array of cultural and historical backgrounds, through its corporate philosophy and management policies. Daifuku has a vision for its entire Group to fulfill its In fiscal 2014, seven more products were added to the environmental responsibility for the next generation as a lineup of certified Daifuku Eco-Products, the in-house Global Leadership Training member of the global community. program to rate and certify the energy and environmental Daifuku holds a training program in Japan with the aim of design of Daifuku products. We now have 21 certified Eco- enhancing the skills of executives and executive candidates products in total (cumulated from fiscal 2012).

from global affiliates. In fiscal 2014, nine personnel from An automated warehouse system for long objects, one of the 2014 certified Europe and Asia attended this program. The attendees Eco-Products. By cutting its whole weight, the system saves energy in heard lectures on the Group’s management philosophies, operation and reduces environmental basic management policies, and business strategies, the impacts during production. Company’s investor relations, and other management matters from top management and additionally deepened their knowledge and sense of responsibility as global leaders.

Employee Teamwork Initiative Presentations Daifuku encourages its employees to undertake teamwork initiatives and hosts a Groupwide presentation contest each year. In fiscal 2014, 11 teams from Japan, Taiwan, South Korea, China, and the United States participated in the Fiscal 2014 environmental action plans and results contest. Participants were able to communicate with each Daifuku sets forth its targets and action plans for global warming prevention, resource saving, biodiversity other through presentations on techniques and product conservation, green procurement, Daifuku Eco-Products certification, CO2 reduction contribution, environmental quality as well as understand the behind-the-scene work of education, and environmental management framework. manufacturing quality products.

Carbon dioxide (CO2) emissions from business activities CO2 emissions from transportation Presentation Meetings on the Brand Message Scope: Japan (factories and offices) / control index: Scope: Japan (product transport) / control index: units of CO2 emissions compared to FY2005 units of CO2 emissions compared to FY2005 In fiscal 2013, Daifuku held briefing sessions throughout the (t-CO2) (%) Total CO2 emissions (t-CO2) (%) Group with the aim to increase awareness and understanding 30,000 120 Target Result 5,000 120 Target Result 100.0 Reduce by 100.0 Reduce to of the DAIFUKU brand. A total of 53 sessions were held in 25,000 100 100 19% 4,000 84% 78.2 80.4 82.7 35.3% 81.5 60.4% 20,000 80 or more 80 or lower Japan and 22 times outside of Japan, communicating with 3,000 66.9 Achieved 60.4 Achieved global staff using a video message from the president and 15,000 60 4,829 60 25,665 Per unit of net sales 2,000 10,000 40 Target Result 3,296 40 documents in four languages: Japanese, English, Chinese, 16,788 16,774 16,616 2,627 1,000 2,285 5,000 20 Reduce to 20 and Korean. 78% 82.7% 0 0 or lower 0 0 In fiscal 2014, the Company held another session for (FY) 2005 2012 2013 2014 Not achieved (FY) 2005 2012 2013 2014 due to external “Daifuku’s CSR” and discussed how to increase the DAIFUKU factors

brand power. (Picture: upper right) CO2 emissions Waste generated per unit of net sales: FY2005=100

For more details on Daifuku’s CSR activities, please refer to Daifuku’s CSR Report: www.daifuku.com/csr/report.html

24 DAIFUKU CO., LTD. ANNUAL REPORT 2015 25 Directors, Auditors, and Officers (As of June 26, 2015)

Directors

Apr. 1971 Joined Daifuku Machinery Works Co., Ltd. Dec. 2007 Chairman and Co-CEO of Jervis B. Webb Company, an Apr. 1980 Joined Daifuku Machinery Works Co., Ltd. Apr. 1983 Joined Daifuku Machinery Works Co., Ltd. (now Daifuku Co., Ltd.) affiliate of Daifuku Co., Ltd. (now Daifuku Co., Ltd.) (now Daifuku Co., Ltd.) Jun. 1998 Director, member of the board Apr. 2008 President and Co-CEO Jul. 2008 Administration Officer with director status Apr. 2008 General Manager of the Semiconductor Apr. 2000 President of Daifuku America Corporation, an affiliate of COO of Webb Business Jun. 2010 Director, member of the board Division under e-Factory Automation (eFA) Daifuku Co., Ltd. Jan. 2011 Chairman and Co-CEO of Daifuku Webb Holding Company General Manager of the Corporate Social Operations (to present) Apr. 2004 Representative Director (to present) (now Daifuku North America Holding Company), a subsidiary Responsibility Division Jun. 2010 Director, member of the board Senior Managing Director of Daifuku Co., Ltd. Jun. 2011 Managing Officer with an introduction of Jun. 2011 Managing Officer with an introduction of Chief Operating Officer (COO) of Business Support Apr. 2012 President and CEO (to present) ­corporate officer system ­corporate officer system Management COO of Production Control Apr. 2012 General Manager of the Business Continuity Apr. 2015 General Manager of eFA Global Operations COO of Overseas Business Management COO of Service Control Plan Promotion Division (to present) President of Daifuku Canada Inc., a subsidiary of Daifuku Apr. 2013 Chairman of Daifuku (China) Co., Ltd. General Manager of eFA Operations Co., Ltd. ­(to present) (to present) Apr. 2006 Executive Vice President Jun. 2015 Director, Managing Officer (to present) Jun. 2015 Director, Managing Officer (to present) Masaki Hojo Apr. 2007 COO of Automotive Factory Automation (AFA) Operations Yoshiyuki Nakashima Seiji Sato President and CEO General Manager of AFA Operations Director Director Chairman of Daifuku (China) e-Factory Automation Co., Ltd.

Apr. 1973 Joined Daifuku Machinery Works Co., Ltd. Apr. 1969 Joined Daifuku Machinery Works Co., Ltd. Apr. 1983 Joined Daifuku Machinery Works Co., Ltd. Apr. 1965 Joined Mitsubishi Corporation (now Daifuku Co., Ltd.) (now Daifuku Co., Ltd.) (now Daifuku Co., Ltd.) Jan. 1984 Worked as assistant manager of legal affairs Jul. 2004 Administration Officer with director status Jul. 2004 Administration Officer with director status Apr. 2012 Corporate Officer department at Mitsubishi Corporation Jun. 2006 Director, member of the board Jun. 2005 Director, member of the board General Manager of the Sales Division under (Americas) General Manager of the Sales Division under General Manager of the Business Support FA&DA Operations (to present) Aug. 1993 Became professor at the Institute of Factory & Distribution Automation (FA&DA) Operations Apr. 2014 Managing Officer Business Law and Comparative Law and Operations Apr. 2008 General Manager of Finance and Accounting General Manager of FA&DA (Global) Politics of the University of Tokyo Jun. 2011 Director, Managing Officer Division Operations (to present) Jun. 2003 Professor emeritus at the University of Tokyo Apr. 2012 Director, Senior Managing Officer Apr. 2010 Chief Financial Officer Apr. 2015 General Manager of FA&DA Operations (to present) Chief Operating Officer (COO) of FA&DA Jun. 2011 Director, Managing Officer ­(to present) Apr. 2004 Professor at Graduate School of Law of Operations Apr. 2012 Representative Director (to present) Jun. 2015 Director, Managing Officer (to present) Chuo University Apr. 2013 Representative Director (to present) Senior Managing Director Jun. 2011 Director of the Foundation for Civil Dispute Akio Tanaka Senior Managing Director Mikio Inohara Apr. 2013 Chief Financial and Risk Officer (CFO and Hiroshi Geshiro Noboru Kashiwagi* Resolution Research Funds (to present) Apr. 2014 Executive Vice President (to present) CRO) (to present) Jun. 2012 Outside Director of Daifuku Co., Ltd. Executive Vice President COO of all business operations (to present) Executive Vice President Apr. 2014 Executive Vice President (to present) Director Outside Director ­(to present) and COO CFO and CRO Factory & Distribution Automation

Apr. 1979 Joined The Dai-Ichi Kangyo Bank, Limited Apr. 1981 Joined Daifuku Machinery Works Co., Ltd. Jul. 1978 Joined PricewaterhouseCoopers (PwC) (now Mizuho Financial Group, Inc.) (now Daifuku Co., Ltd.) Osaka Office Mar. 2006 Executive Officer of Mizuho Corporate Bank, Apr. 2007 President of Daifuku Canada Inc. Aug. 1982 Registered as a Japanese certified public Ltd. Apr. 2009 General Manager of the Sales Division under accountant (CPA) Jun. 2011 Became Managing Director of Mizuho AFA Operations Oct. 1985 Worked at Coopers & Lybrand New York Corporate Bank, Ltd. Jun. 2010 Director, member of the board Office Apr. 2012 Joined Daifuku Co., Ltd. as a corporate Jun. 2011 Managing Officer with an introduction of Jul. 1990 Registered as a U.S. CPA (New York) ­advisor corporate officer system Jan. 2008 Senior partner of PwC Aarata Jun. 2013 Director, member of the board, Managing Jun. 2014 Director, Managing Officer (to present) Apr. 2012 Professor of Business Administration Officer General Manager of AFA (Global) Operations at St. Andrew’s University (to­ present) Chief Operating Officer of Corporate Affairs (to present) Sep. 2012 Left PwC Aarata Apr. 2014 Director, Senior Managing Officer (to present) Apr. 2015 General Manager of AFA Operations under Jun. 2014 Outside Director of Daifuku Co., Ltd. Shuichi Honda Apr. 2015 General Manager of Corporate Business Hidenori Iwamoto AFA Global Operations (to present) Yoshiaki Ozawa (to present) Development Division (to present) General Manager of the Sales Division under Director General Manager of ABH Global Operations Director AFA Operations (to present) Outside Director Corporate Business (to present) Automotive Factory Development and Airport Automation Baggage Handling

Auditors Officers

Apr. 1978 Joined Daifuku Machinery Works Co., Ltd. Apr. 1982 Joined Daifuku Machinery Works Co., Ltd. Apr. 1969 Joined Nikkei Inc. Managing Officers (now Daifuku Co., Ltd.) (now Daifuku Co., Ltd.) Apr. 1987 Editorial Writer of Nikkei Inc. Apr. 2005 Became Manager of the Logistics Systems Apr. 2003 Became Manager of the Osaka Group of the Director of Research Department of Nikkei Akira Ikari Kanji Anno Sales Group of the Sales Division, under Accounting Department Research Institute of Industry and Markets Lifestyle Products Factory & Distribution Automation FA&DA Operations Apr. 2006 General Manager of the Finance and Jan. 2002 Affiliate Professor of Research Center for Production Apr. 2012 Senior Assistant to the President Accounting Department Advanced Science and Technology of the Tadashi Kimura Jun. 2012 Audit and Supervisory Board Member Apr. 2012 Corporate Officer University of Tokyo (to present) General Manager of the Finance and Apr. 2002 Professor of Research Laboratory for Nuclear Factory & Distribution Automation Accounting Division Reactor of Tokyo Institute of Technology Services Apr. 2014 Assistant to CFO and CRO Sep. 2008 JST Project Senior Officer, Japan Science Jun. 2014 Audit and Supervisory Board Member and Technology Agency (to­ present) (to present) Jun. 2010 Audit and Supervisory Board Member Corporate Officers (outside) of Daifuku Co., Ltd. (to present) Tatsujiro Kurosaka Yoshihisa Kimura Hiroyuki Torii* Ken Sasaki Toshiaki Hayashi Audit and Supervisory Audit and Supervisory Audit and Supervisory Lifestyle Products Production Automotive Factory Automation Board Member Board Member Board Member (outside) Production Hiroshi Nobuta Takaya Uemoto Apr. 1973 Joined Mori Sogo Law Offices (now Mori Apr. 1966 Joined Japan Broadcasting Corporation Hamada & Matsumoto) (to present) (NHK) as Program Director of News Executive Vice President of Daifuku Automotive Factory Automation Project Registered as an attorney Department North America Holding Company Management Oct. 1980 Registered as an attorney in New York Jun. 1991 Bureau Chief of NHK Paris Bureau Jun. 2004 Audit and Supervisory Board Member Jun. 1995 Managing Director of NHK Enterprises 21 Yoshiyuki Horiba Akihiko Nishimura ­(outside) of Daifuku Co., Ltd. (to present) Inc. Oct. 2007 Council Member of Roundtable Conference, Oct. 1999 Executive Managing Director of NHK e-Factory Automation (FPD) President and CEO of Daifuku North Japan Fair Trade Commission (to present) International, Inc. America Holding Company Jun. 2010 Outside Audit & Supervisory Board Member Jun. 2007 Audit and Supervisory Board Member of Sumitomo Dainippon Pharma Co., Ltd. (outside) of Daifuku Co., Ltd. (to present) Akihiko Kishida Yoshihisa Ichinose (to present) May 2008 Executive Producer of NHK Enterprises, Inc. Chairman of Daifuku (China) Corporate Social Responsibility Apr. 2012 Member of the Board of Directors (auditor) of Dec. 2008 Special Adviser of Japan International Automation Co., Ltd. Chief Officer of Komaki Works the Japan Business Federation (Keidanren) Broadcasting Inc. (to present) * Noboru Kashiwagi, Isao Kitamoto, and Hiroyuki Torii are independent officers, appointed in Harumichi Uchida (to present) Isao Kitamoto* Audit and Supervisory Audit and Supervisory accordance with the Securities Listing Regulations partially revised in Dec. 2009. Board Member (outside) Board Member (outside) 26 DAIFUKU CO., LTD. ANNUAL REPORT 2015 27 Financial Section

Eleven-Year Summary Daifuku Co., Ltd. and consolidated subsidiaries Years ended March 31, 2005 to 2015

(Million yen and U.S. thousand dollars) 2015 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 For the Year Net sales ¥267,284 $2,222,366 ¥241,811 ¥202,337 ¥198,052 ¥159,263 ¥154,208 ¥242,182 ¥231,619 ¥232,703 ¥198,811 ¥166,232 Cost of sales 215,641 1,792,975 194,974 165,340 165,505 131,639 128,195 195,430 182,260 186,991 159,312 134,696 Selling, general and administrative expenses 36,759 305,641 34,279 28,986 28,328 25,897 25,932 31,736 28,680 26,876 22,982 20,746 Operating income 14,883 123,750 12,556 8,010 4,217 1,726 80 15,015 20,677 18,837 16,517 10,790 Income before income taxes and minority interests 15,211 126,480 12,137 7,316 3,129 703 862 13,956 20,592 18,356 16,741 8,580 Net income 9,810 81,572 7,740 4,439 1,223 269 1,018 7,851 11,893 11,382 10,253 5,231

Net income per share (Yen and U.S. dollars) ¥ 88.59 $ 0.73 ¥ 69.96 ¥ 40.12 ¥ 11.05 ¥ 2.43 ¥ 9.20 ¥ 70.29 ¥ 105.05 ¥ 100.50 ¥ 92.20 ¥ 46.07

Cash dividends per share (Yen and U.S. dollars) 22.00 0.18 18.00 15.00 15.00 15.00 20.00 26.00 26.00 25.00 18.00 13.00 Capital investment ¥ 7,532 $ 62,632 ¥ 10,446 ¥ 7,687 ¥ 2,393 ¥ 3,221 ¥ 2,280 ¥ 4,613 ¥ 4,071 ¥ 8,281 ¥ 5,236 ¥ 3,671 Depreciation 4,157 34,570 3,821 3,332 3,612 3,577 3,679 3,930 3,401 2,886 2,271 2,184 R&D expenditures 6,945 57,749 7,490 6,855 6,484 6,370 6,075 8,018 6,964 7,564 7,629 4,970

At Year-End Total assets ¥271,011 $2,253,363 ¥249,531 ¥206,875 ¥185,049 ¥163,388 ¥165,430 ¥194,727 ¥222,386 ¥195,016 ¥181,990 ¥147,158 Working capital 91,187 758,192 87,070 45,832 61,943 65,908 66,265 75,087 64,840 60,351 52,249 42,575 Interest-bearing liabilities 60,547 503,428 58,144 53,385 51,010 40,912 45,295 55,417 33,559 33,764 33,856 29,136 Net assets 111,521 927,261 99,690 85,685 76,618 77,714 81,295 82,810 88,709 80,718 68,882 53,337

Net assets per share (Yen and U.S. dollars) ¥ 972.75 $ 8.08 ¥ 875.14 ¥ 754.98 ¥ 674.72 ¥ 683.39 ¥ 716.07 ¥ 718.68 ¥ 746.59 ¥ 682.01 ¥ 608.12 ¥ 480.14 Number of employees 7,746 7,349 6,678 5,617 5,209 5,395 5,660 5,663 4,702 4,109 3,716

Ratios Operating income/net sales 5.6% 5.2% 4.0% 2.1% 1.1% 0.1% 6.2% 8.9% 8.1% 8.3% 6.5% Income before income taxes and minority interests/net sales 5.7 5.0 3.6 1.6 0.4 0.6 5.8 8.9 7.9 8.4 5.2 Net income/net sales 3.7 3.2 2.2 0.6 0.2 0.7 3.2 5.1 4.9 5.2 3.1 Return on shareholders’ equity (ROE) 9.6 8.6 5.6 1.6 0.3 1.3 9.6 14.7 15.6 16.8 10.2 Shareholders’ equity/total assets 39.8 38.8 40.4 40.3 46.3 47.9 40.9 38.0 39.6 37.8 36.2

Notes: 1. The amount of “Capital investment” in the year ended March 31, 2015 includes goodwill generated from acquisition of shares in overseas companies. 2. The U.S. dollar amounts in this annual report are translated from Japanese yen for convenience only, at the rate of ¥120.27 = U.S.$1.00, on the Tokyo Foreign Exchange Market on March 31, 2015. 3. In the calculation of net assets per share, the amount of minority interests is subtracted from the amount of net assets in accordance with the above guidelines. 4. In the calculation of shareholders’ equity/total assets ratio and ROE, shareholders’ equity represents the amount of net assets less minority interests.

Contents

30 Operating and Financial Review 36 Consolidated Balance Sheets 38 Consolidated Statements of Income and Comprehensive Income 39 Consolidated Statements of Changes in Net Assets 41 Consolidated Statements of Cash Flows

28 DAIFUKU CO., LTD. ANNUAL REPORT 2015 29 Operating and Financial Review

Scope of Consolidation Orders for systems from manufacturers and distributors Consequently, the Group posted operating income of Orders and sales of automobile production line systems and Number of Employees outside Japan increased. In North America, orders 14,883 million yen, up 18.5% from a year earlier. Net remained firm in emerging countries, including Russia and In fiscal 2014, the year ended March 31, 2015, nine com- received by Wynright Corporation (“Wynright”), which income was 9,810 million yen, up 26.7% from the previous Brazil. In Japan, orders and sales of services and other panies were newly consolidated with the parent company, joined the Group in October 2013, and, in South Korea, year, reflecting a favorable operating performance despite small upgrade projects were also firm. In addition, orders bringing the total number of consolidated subsidiaries to large orders from the e-commerce and cosmetics sectors some impact from extraordinary losses and an increase in for parts logistics systems started to show positive results. 61. On a consolidated basis, Daifuku Co., Ltd. and its contributed to earnings. In addition, demand from North deferred income taxes along with the reduction of corpo- Sales of car wash machines remained firm, mainly for ­consolidated subsidiaries had 7,746 employees as of America’s automobile factories was firm, and a series of rate tax rates. car service stations. the fiscal year-end. large orders for systems for semiconductor and flat-panel Results by reportable segment are as described below. Segment income benefited from the Company’s display (FPD) factories in Taiwan, which were received in Orders from and sales to outside customers are shown as ­progress overall in cost-cutting efforts in production, the Analysis of Operating Results the second half of the fiscal year, also contributed to segment orders and sales, and net income is recorded as increase in production and profitability during the fourth During fiscal 2014, the global economy faced concerns ­earnings. segment income. quarter of fiscal 2014, and other factors. stemming from a slowdown in economic growth in China Sales were favorable, underpinned by systems for man- As a result, Daifuku recorded orders of 137,012 million and many other emerging countries, while European econ- ufacturers, distributors, and automobile factories in North Operating Results by Segment yen, up 16.7% from the previous fiscal year, net sales of omies showed continued weakness. Meanwhile, the U.S. America, as well as systems for FPD factories in China. (1) Daifuku Co., Ltd. 115,065 million yen, up 4.4%, and segment income of economy continued its recovery trend, and the Japanese As a result, the Group received orders of 305,567 million Orders and sales of Daifuku’s mainstay manufacturing and 7,041 million yen, up 22.2%. economy maintained a slow recovery from the marginal yen, a rise of 10.4% from a year earlier, and recorded net distribution systems for large projects remained firm in the influence of the consumption tax increase, bolstered by a sales of 267,284 million yen, an increase of 10.5%. distribution, pharmaceutical, food, e-commerce, super- (2) Contec Group weakened yen, lower crude oil prices, and other factors. Turning to profits, the high level of earnings generated market and co-op sectors. In addition, large orders from (Contec Co., Ltd., and its subsidiaries) The material handling and logistics industry is experi- by Daifuku Co., Ltd., strong sales posted by Contec Co., the e-commerce and cosmetics sectors in South Korea In the industrial computer business in the Japanese mar- encing rising demand from the e-commerce sector Ltd., and positive results recorded by non-Japanese sub- contributed to earnings. ket, sales of industrial-use computers and configurable ­worldwide. In addition, the need for automated facilities sidiaries that sell systems for automobile, semiconductor, In systems for semiconductor and FPD factories, orders PCs remained favorable, supported by increased capital is growing due to the issue of labor shortages in Japan. and FPD factories in North America and Asia contributed and sales remained steady in the United States and Asian investment. In addition, in the U.S. market, sales of prod- Amid these operating conditions, the operating results to income. countries, due to trends toward semiconductor miniatur- ucts for the medical device sector were firm. of the Daifuku Group (“the Group”) have made steady ization, large flat-screen TV displays, and high-definition Sales of measuring and control boards for automobile progress, with orders and sales rising to record highs, panels used in smartphones and tablet PCs. production facilities grew along with the increased capital and increased sales and profits were reported for the investment of auto-related manufacturers. fifth consecutive year.

Net Sales Operating Income Net Income Net Assets and ROE Total Assets and ROA Interest-Bearing Liabilities (Million yen) (Million yen) (Million yen) (Million yen) (%) (Million yen) (%) (Million yen) 300,000 15,000 10,000 120,000 12 300,000 5.0 64,000

12,000 8,000 4.0 90,000 9 48,000 200,000 200,000 9,000 6,000 3.0 60,000 6 32,000 6,000 4,000 2.0 100,000 100,000 30,000 3 16,000 3,000 2,000 1.0

0 0 0 0 0 0 0 0 (FY)2010 2011 2012 2013 2014 (FY)2010 2011 2012 2013 2014 (FY)2010 2011 2012 2013 2014 (FY)2010 2011 2012 2013 2014 (FY)2010 2011 2012 2013 2014 (FY)2010 2011 2012 2013 2014

L L Net assets ROE L L Total assets ROA

30 DAIFUKU CO., LTD. ANNUAL REPORT 2015 31 In the networking product business, the Contec Group As a result, the Daifuku Webb Group achieved orders of In Thailand, Indonesia, Malaysia, and Singapore, orders As a result, operating income rose 18.5%, to 14,883 mil- strove to identify new markets and introduced new wire- 75,725 million yen, up 0.7% from the previous fiscal year, grew at a sluggish pace, reflecting unfavorable business lion yen. Despite the reporting of extraordinary losses and less LAN products in the FLEXLAN ZC series for educa- net sales of 76,547 million yen, up 45.1%, and segment sentiment. However, in consideration of Southeast Asia’s an increase in income taxes, net income rose a substantial tional institutions. income of 1,554 million yen, down 7.5%. potential, the Daifuku Group has strengthened its local 26.7%, to 9,810 million yen. The effective income tax rate In the solution products business, despite efforts in mar- In January 2015, Daifuku Webb Holding Company operating frameworks and its market presence through for fiscal 2014 was 35.6%. As a consequence, net income keting activities for hospital bedside information terminals changed its company name to Daifuku North America participation in local trade fairs, seeking orders from auto- per share rose from 69.96 yen per share in the previous and automobile production management systems, sales of Holding Company, with the aim of further advancing its mobile factories that need to upgrade or replace their facil- fiscal year to 88.59 yen per share for fiscal 2014. photovoltaic data measuring systems decreased, as an businesses activities in North America. ities, as well as meeting demand for low-temperature electric company temporarily suspended responses to logistics in the food and beverage sectors. Financial Position applications for connecting photovoltaic energy. (4) Other In New Zealand, the acquisition of BCS Group Limited Assets, liabilities, and net assets As a result of the above developments, the Contec The Other segment includes all other Daifuku Group com- (“BCS”), which sells airport baggage handling systems in Total assets at the end of fiscal 2014 were 271,011 million Group reported orders of 15,374 million yen, up 3.7% from panies, excluding the aforementioned Contec and Daifuku Oceania and Asia, was completed at the end of December yen, an increase of 21,480 million yen year on year. This the previous fiscal year, net sales of 14,634 million yen, up Webb group companies. The Group has 61 consolidated 2014. Accordingly, only the balance sheets of the 12 BCS result principally reflected increases of 2,428 million yen 9.5%, and segment income of 845 million yen, up 16.2%. subsidiaries and affiliates located worldwide. group companies were consolidated into the results of fis- in notes and accounts receivable and unbilled receivables, Outside Japan, major subsidiaries primarily manufacture cal 2014. Looking ahead, the Group will strive to expand 4,079 million yen in insufficient charges on uncompleted (3) Daifuku Webb Group and sell material handling systems and equipment. These this business and increase profitability through further contracts, and 4,149 million yen in inventories, including (Daifuku Webb Holding Company and its subsidiaries companies have boosted exports to markets in other ­collaboration with other Group companies that operate costs on uncompleted contracts, as well as an increase and affiliates) countries and are playing a global role in the optimal local in North America and Europe. of 2,765 million yen in goodwill, mainly related to the In systems for manufacturers and distributors, Wynright, production and procurement framework of the Group. As a consequence of these developments, the segment acquisition of affiliates. which joined the Group in October 2013, significantly con- In China, orders for systems for FPD factories were received orders of 77,455 million yen, including BCS’s Total liabilities at the end of fiscal 2014 were 159,490 tributed to earnings, mainly receiving large orders from the brisk. Sales of systems for automobile factories remained order backlogs, up 11.5% from the previous fiscal year, million yen, an increase of 9,649 million yen year on year. food, apparel and department store sectors. The integra- firm. In systems for manufacturers and distributors, orders and reported net sales of 64,615 million yen, up 0.7%, and Primary factors included an increase of 2,402 million yen tion of the production and sales frameworks for these included systems for a large parts center for a non-Chi- segment income of 4,127 million yen, up 38.8%. in interest-bearing liabilities, as well as an increase of ­systems into Wynright was completed. The Daifuku Webb nese automaker, in addition to large orders from pharma- 3,460 million yen in liabilities for retirement benefits. Group will pursue further benefits from collaboration within ceutical manufacturers and wholesalers as well as the Earnings Net assets at the end of fiscal 2014 were 111,521 million the Group. food sector. During fiscal 2014, as mentioned previously, net sales yen, an increase of 11,831 million yen year on year. This In systems for the semiconductor sector, sales of In Taiwan, orders for systems for domestic FPD factories increased 10.5%, to 267,284 million yen. The gross was mainly attributable to an increase of 7,616 million yen ­nitrogen purge stockers and other items were favorable. increased, while Taiwan Daifuku Co., Ltd. produced sys- ­profit margin decreased 0.1 percentage point, to 19.3%. in retained earnings, as well as an increase of 3,138 million In automobile production line systems, orders and sales tems for FPD factories in China, where large projects are Although the profitability of Daifuku on a non-consolidated yen in total other comprehensive income due to changes, of both new installations and services remained favorable, continuing. basis was high and sales of Contec were robust, the gross etc., in securities owned and foreign currency translation reflecting brisk capital investment among automakers in In South Korea, orders from semiconductor manufactur- profit margin declined slightly because of low-margin adjustments. The ratio of shareholders’ equity to total North America, including Detroit’s Big Three and Japanese ers were favorable. Daifuku Korea Co., Ltd. is steadily ­projects­ in markets outside Japan. The ratio of selling, assets stood at 39.8% at fiscal year-end, and the return automakers. receiving orders for systems for automobile factories, general and administrative expenses improved 0.4 on equity (ROE) was 9.6%. In airport baggage handling systems, orders are now and demand for systems for the distribution sector is ­percentage point, to 13.8%. on a recovery trend. Unprofitable projects are nearing increasing. completion.

32 DAIFUKU CO., LTD. ANNUAL REPORT 2015 33 Cash flows Under its four-year business plan Value Innovation 2017, ROE and will strengthen its earning power and financial (8) Customer/Supplier credit risk (customer/supplier Cash and cash equivalents at the end of fiscal 2014 Daifuku aims to achieve sustainable growth in dividend per position to maintain a stable ROE of 10%. Furthermore, doubtful accounts/bad debts, etc.) increased 2,228 million yen from the end of the previous share and a medium- to long-term dividend payout ratio of other key Group objectives will include aiming for sustain- (9) Information management (leak of important and/or fiscal year, to 54,081 million yen, compared with 51,852 30%. able growth in dividends per share, a medium- to long- ­personal information to outside the Company; use million yen in the same period of the previous fiscal year. For fiscal 2014, Daifuku paid an interim dividend of 7 term dividend payout ratio of 30%, an increase in for purposes other than that intended, etc.) yen per share and a year-end dividend of 15 yen per share, shareholders’ equity through the conversion of outstand- (10) Risk related to global business development (changes Cash flows from operating activities making the annual dividend 22 yen per share. ing convertible bonds, an improved R&I rating, and an to each country’s laws and regulations; changes in the Net cash provided by operating activities totaled 6,295 With respect to dividends for fiscal 2015, the year end- increase in net income per share. social, political and economic situation; deterioration million yen, compared with cash provided of 20,447 million ing March 31, 2016, the Company plans to pay an annual For additional information on the Group’s medium- to in public safety, disruption to transportation/electric yen in the same period of the previous fiscal year. This pri- dividend of 25 yen per share (an interim dividend of 10 yen long-term strategy, please refer to the Message from the power infrastructure; currency exchange restrictions marily reflects 7,021 million yen in income taxes paid and per share and a year-end dividend of 15 yen), taking into CEO section of this report. and fluctuations; tax system changes; taxation by a decrease of 3,657 million yen in notes and accounts consideration the earnings forecast for fiscal 2015 and the transfer price; trade protection regulations; customer payable, offsetting the income before income taxes basic policy described above. Business-Related Risks credit risk from different commercial practices; differ- and minority interests of 15,211 million yen and the The main items that the Daifuku Group recognizes as risks ent employment/social insurance systems; changes in ­depreciation of 4,157 million yen. Management Policy and responds to as such are as follows. Some of the con- labor environment; difficulties in recruiting/retaining Basic management policy for the Group tent of this section constitutes forward-looking statements. personnel; outbreaks of disease, etc.) Cash flows from investing activities Daifuku has grown to become a manufacturer and Accordingly, please note that these statements have been Net cash used in investing activities was 5,846 million yen, ­systems integrator vying for the No. 1 and No. 2 positions made based on judgments of the Group as of the date of Risks covered by the Chief Operating Officer compared with cash used of 7,372 million yen in the same within the material handling field, as a result of consistently submission of its Securities Report to Japan’s Ministry of (1) Impacts of conditions in the markets related to semi- period of the previous fiscal year. Major activities included seeking to achieve sustainable growth based on its medi- Finance. conductors and flat-panel displays, as well as automo- outlays of 3,666 million yen for the purchase of non-cur- um-term business plans. For fiscal 2014, the Company biles (changes in demand/capital investment trends, rent assets and 3,140 million yen for the acquisition of was ranked first in sales in the material handling industry Risks covered by the Chief Financial Officer etc.) shares in newly consolidated subsidiaries. in the world for the first time in three years, according to and Chief Risk Officer (2) Price competition (pressure on profits due to fierce the U.S. magazine, Modern Materials Handling - April (1) Major disruptions in production (damage to facilities, price competition, etc.) Cash flows from financing activities 2015. etc.) (3) Product quality issues (product defects/failures, quality Net cash used in financing activities was 509 million yen, Under the four-year business plan Value Innovation (2) Impact of natural disasters and intentional threats, war, claims/complaints, etc.) compared with cash provided of 1,045 million yen in the 2017, which started with fiscal 2013, the year ended acts of terrorism, strikes, disease, etc. (4) Risk related to the development of new products/­ same period of the previous fiscal year. Major factors were March 31, 2014, the Group aims to evolve into a top-class (3) Environmental problems technologies (mismatch between new products/­ an increase of 1,754 million yen in interest-bearing liabili- Value Innovator that provides the best solutions for cus- (4) Labor relations issues (deterioration in the employee-­ technologies and market needs; rival developments ties, largely offsetting the dividend payment of 2,218 mil- tomers worldwide by capitalizing on the experience and management relationship, outbreak of industrial from competitors; absence of IP right protection; lion yen. technologies it has accumulated as a comprehensive ­disputes, etc.) breach of another company’s IP rights; emergence of ­manufacturer and integrator of material handling systems. (5) Joint ventures (deterioration in management policy at new alternative technology products from other compa- Basic policy regarding dividends for fiscal 2014 In the plan Value Innovation 2017, the Group set man- joint venture partner(s), deterioration in management nies, etc.) and 2015 agement targets to achieve net sales of 280 billion yen and environment, etc.) (5) Increase in raw material prices (sharp increase in prices Daifuku regards the return of profits to shareholders as its an operating income ratio of 7% for fiscal 2016, the year (6) Risk related to intellectual property (IP) rights (failure to for raw materials and components, product shortages, most important management task and has adopted a per- ending March 31, 2017. However, net sales of 320 billion obtain the license for use of the third-party IP rights/ supply instability, etc.) formance-based policy for cash dividends based on con- yen are now projected for fiscal 2015, which will be a year royalty demands; third-party allegations of IP right solidated net income, with the aim of achieving additional earlier than the initial target. Accordingly, the Group has infringement(s); lack of protection of Daifuku IP rights Risks covered by the Compliance Committee profit distribution to shareholders. The Company appropri- revised the management targets to net sales of 340 billion in certain countries and regions outside of Japan, etc.) Compliance-related risks (trouble or losses caused by ates the remaining surplus to internal reserves for future yen and operating income of 21 billion yen for the plan’s (7) Securing of personnel (recruitment and retention of director/employee failure to observe laws, regulations, growth. final fiscal year. In addition, the Group has added a target competent personnel; difficulties in training human standards, internal regulations, policies, etc.) resources, etc.)

34 DAIFUKU CO., LTD. ANNUAL REPORT 2015 35 Consolidated Balance Sheets Daifuku Co., Ltd. and consolidated subsidiaries March 31, 2015 and 2014

(U.S. thousand (U.S. thousand (Million yen) dollars) (Note 6) (Million yen) dollars) (Note 6) March 31 March 31 March 31 March 31 ASSETS 2015 2014 2015 LIABILITIES 2015 2014 2015 Current assets: Current liabilities: Cash on hand and in banks (Notes 9 and 28) ¥ 54,202 ¥ 52,132 $ 450,677 Notes and accounts payable and construction contracts payable Notes and accounts receivable and unbilled receivables (Note 9) ¥ 36,568 ¥ 36,818 $ 304,054 (Note 9) 76,645 74,217 637,281 Electronically recorded obligations-operating (Note 9) 10,827 10,061 90,026 Costs and estimated earnings in excess of billings Short-term borrowings and current portion of long-term borrowings on uncompleted contracts (Note 9) 19,414 15,334 161,420 (Notes 9 and 12) 12,904 7,014 107,292 Merchandise and finished goods 3,561 3,307 29,609 Income taxes payable 1,210 3,991 10,064 Costs incurred on uncompleted construction contracts Provision for losses on construction contracts (Notes 8 and 20) 505 275 4,200 and other (Note 8) 8,990 6,599 74,751 Other current liabilities (Note 12) 31,837 25,548 264,719 Raw materials and supplies 11,980 10,475 99,612 Total current liabilities 93,853 83,711 780,359 Deferred tax assets (Note 27) 2,810 3,502 23,366 Other current assets 7,574 5,349 62,977 Non-current liabilities: Less: allowance for doubtful accounts (137) (137) (1,144) Bonds (Notes 9 and 12) 2,700 2,700 22,449 Total current assets 185,041 170,781 1,538,551 Bonds with stock acquisition rights (Notes 9 and 12) 15,093 15,131 125,498 Long-term borrowings (Notes 9 and 12) 29,849 33,298 248,186 Deferred tax liabilities (Note 27) 1,580 1,410 13,138 Liabilities for retirement benefits (Notes 3 and 14) 12,142 8,681 100,956 Non-current assets: Negative goodwill 179 239 1,494 Property, plant and equipment (Notes 7 and 13): Other non-current liabilities (Note 12) 4,091 4,667 34,017 Buildings and structures 14,754 14,618 122,680 Total non-current liabilities 65,636 66,129 545,742 Machinery and vehicles 3,507 3,457 29,160 Total liabilities 159,490 149,840 1,326,101 Tools and fixtures 1,830 1,409 15,219 Land 12,018 11,801 99,927 Contingent liabilities (Note 16) Other 2,562 2,788 21,307 Total property, plant and equipment 34,673 34,075 288,295 NET ASSETS Shareholders’ equity (Note 18): Common stock: Authorized—250,000,000 shares Intangible assets: Issued—113,671,494 shares 8,024 8,024 66,716 Software 3,100 1,944 25,776 Capital surplus 9,239 9,239 76,821 Goodwill 12,905 10,139 107,301 Retained earnings 83,626 76,009 695,319 Other 3,040 2,772 25,281 Less: treasury stock, at cost—March 31, 2015—2,853,707 shares Total intangible assets 19,045 14,856 158,359 March 31, 2014—3,012,390 shares (2,419) (2,620) (20,116) Total shareholders’ equity 98,469 90,652 818,740

Accumulated other comprehensive income: Investments and other assets: Net unrealized gain on securities 4,639 3,102 38,574 Investments in securities (Notes 9, 10, and 11) 21,728 20,628 180,665 Deferred gain (loss) on hedges (72) (29) (599) Long-term loans 125 142 1,047 Foreign currency translation adjustments 10,542 5,310 87,655 Assets for retirement benefits (Notes 3 and 14) 643 268 5,349 Accumulated adjustments on retirement benefits (Notes 3 and 14) (5,781) (2,194) (48,072) Deferred tax assets (Note 27) 6,130 5,800 50,969 Total accumulated other comprehensive income 9,327 6,189 77,557 Other 3,752 3,109 31,198 Less: allowance for doubtful accounts (129) (131) (1,073) Minority interests Total investments and other assets 32,251 29,817 268,156 Minority interests 3,723 2,848 30,963

Total non-current assets 85,970 78,749 714,811 Total net assets 111,521 99,690 927,261

Total assets ¥271,011 ¥249,531 $2,253,363 Total liabilities and net assets ¥271,011 ¥249,531 $2,253,363

The accompanying notes are an integral part of these statements. The accompanying notes are an integral part of these statements.

36 DAIFUKU CO., LTD. ANNUAL REPORT 2015 37 Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Changes in Net Assets Daifuku Co., Ltd. and consolidated subsidiaries Daifuku Co., Ltd. and consolidated subsidiaries For the years ended March 31, 2015 and 2014 For the years ended March 31, 2015 and 2014

(U.S. thousand Shareholders’ equity (Million yen) dollars) (Note 6) Number of Treasury Total March 31 March 31 shares of Common Capital Retained stock, shareholders’ 2015 2014 2015 common stock stock surplus earnings at cost equity Net sales ¥267,284 ¥241,811 $2,222,366 (Thousands) (Million yen) Cost of sales (Notes 20 and 21) 215,641 194,974 1,792,975 Balance at March 31, 2013 113,671 ¥8,024 ¥9,028 ¥69,859 ¥(2,424) ¥84,486 Gross profit 51,642 46,836 429,391 Cumulative effects of changes Selling expenses (Note 19) 17,729 16,716 147,417 in accounting policies — — — — — — General and administrative expenses (Notes 19 and 21) 19,029 17,562 158,223 Restated balance 113,671 ¥8,024 ¥9,028 ¥69,859 ¥(2,424) ¥84,486 Total selling, general and administrative expenses 36,759 34,279 305,641 Cash dividends — — — (1,659) — (1,659) Operating income 14,883 12,556 123,750 Net income — — — 7,740 — 7,740 Other income: Purchase of treasury stock — — — — (594) (594) Interest income 169 215 1,411 Disposal of treasury stock — — 210 — 398 609 Dividend income 304 261 2,530 Increase due to acquisition of shares Foreign exchange gain 177 468 1,478 in a subsidiary — — — 69 — 69 Amortization of negative goodwill 59 59 498 Net changes of items other than Land and house rental revenue 173 226 1,441 shareholders’ equity — — — — — — Refunded foreign taxes 168 — 1,400 Balance at March 31, 2014 113,671 ¥8,024 ¥9,239 ¥76,009 ¥(2,620) ¥90,652 Miscellaneous income 416 394 3,465 Total other income 1,470 1,626 12,226 Cumulative effects of changes Other expenses: in accounting policies — — — 28 — 28 Interest expenses 463 810 3,850 Restated balance 113,671 ¥8,024 ¥9,239 ¥76,038 ¥(2,620) ¥90,680 Miscellaneous expenses 107 181 893 Cash dividends — — — (2,221) — (2,221) Total other expenses 570 991 4,744 Net income — — — 9,810 — 9,810 Ordinary income 15,783 13,191 131,231 Purchase of treasury stock — — — — (5) (5) Disposal of treasury stock — — 0 — 206 206 Extraordinary income: Decrease due to acquisition of shares Gain on sales of property, plant and equipment (Note 23) 167 6 1,395 in a subsidiary — — — (1) — (1) Gain on sales of investments in securities 300 — 2,500 Net changes of items other than Other 9 — 76 shareholders’ equity — — — — — — Total extraordinary income 477 6 3,972 Balance at March 31, 2015 113,671 ¥8,024 ¥9,239 ¥83,626 ¥(2,419) ¥98,469 Extraordinary loss: Loss on sales of property, plant and equipment (Note 24) 36 393 305 Loss on disposal of property, plant and equipment (Note 22) 138 68 1,150 Accumulated other comprehensive income Impairment loss (Note 26) 457 370 3,801 Total Loss on sales of shares in affiliates — 148 — Net Foreign Accumulated accumulated Loss on liquidation of subsidiaries and affiliates 160 — 1,334 unrealized Deferred currency adjustments other gain (loss) on gain (loss) Special retirement expenses 125 — 1,047 translation on retirement comprehensive Minority Total net securities on hedges adjustments benefits income interests assets Other 130 80 1,084 (Million yen) Total extraordinary loss 1,049 1,060 8,723 Balance at March 31, 2013 ¥1,809 ¥(14) ¥ (2,743) ¥ — ¥ (948) ¥2,147 ¥ 85,685 Income before income taxes and minority interests 15,211 12,137 126,480 Cumulative effects of changes Income taxes (Note 27) in accounting policies — — — — — — — Current 3,139 5,634 26,100 Restated balance ¥1,809 ¥(14) ¥ (2,743) ¥ — ¥ (948) ¥2,147 ¥ 85,685 Deferred 1,904 (1,545) 15,833 Cash dividends — — — — — — (1,659) Total income taxes 5,043 4,088 41,933 Net income — — — — — — 7,740 Income before minority interests 10,168 8,048 84,546 Minority interests in net income 357 308 2,974 Purchase of treasury stock — — — — — — (594) Net income 9,810 7,740 81,572 Disposal of treasury stock — — — — — — 609 Increase due to acquisition of shares Minority interests in net income 357 308 2,974 in a subsidiary — — — — — — 69 Income before minority interests 10,168 8,048 84,546 Net changes of items other than Other comprehensive income (Note 25) shareholders’ equity 1,293 (14) 8,053 (2,194) 7,138 700 7,839 Net unrealized gain (loss) on securities 1,541 1,417 12,815 Balance at March 31, 2014 ¥3,102 ¥(29) ¥ 5,310 ¥(2,194) ¥6,189 ¥2,848 ¥ 99,690 Deferred gain (loss) on hedges (6) (23) (53) Cumulative effects of changes Foreign currency translation adjustments 5,959 7,193 49,550 in accounting policies — — — — — — 28 Retirement benefits reserves adjustment, net of tax (3,500) — (29,104) Restated balance ¥3,102 ¥(29) ¥ 5,310 ¥(2,194) ¥6,189 ¥2,848 ¥ 99,718 Share of other comprehensive income of affiliates accounted for Cash dividends — — — — — — (2,221) using the equity method (562) 1,115 (4,679) Net income — — — — — — 9,810 Total other comprehensive income 3,431 9,703 28,529 Purchase of treasury stock — — — — — — (5) Comprehensive income (Note 25) ¥ 13,599 ¥ 17,752 $ 113,075 Disposal of treasury stock — — — — — — 206 (Comprehensive income attributable to:) Decrease due to acquisition of shares Shareholders of the parent company ¥ 12,948 ¥ 17,073 $ 107,663 in a subsidiary — — — — — — (1) Minority interests 650 679 5,412 Net changes of items other than (Yen) (U.S. dollars) Net income per share (Note 32) ¥88.59 ¥69.96 $0.73 shareholders’ equity 1,536 (42) 5,231 (3,587) 3,138 875 4,013 Cash dividends per share 22.00 18.00 0.18 Balance at March 31, 2015 ¥4,639 ¥(72) ¥10,542 ¥(5,781) ¥9,327 ¥3,723 ¥111,521 The accompanying notes are an integral part of these statements. The accompanying notes are an integral part of these statements.

38 DAIFUKU CO., LTD. ANNUAL REPORT 2015 39 Consolidated Statements of Changes in Net Assets (Continued) Consolidated Statements of Cash Flows Daifuku Co., Ltd. and consolidated subsidiaries Daifuku Co., Ltd. and consolidated subsidiaries For the years ended March 31, 2015 and 2014 For the years ended March 31, 2015 and 2014

Shareholders’ equity (U.S. thousand (Million yen) dollars) (Note 6) Number of Treasury Total March 31 March 31 shares of Common Capital Retained stock, shareholders’ common stock stock surplus earnings at cost equity 2015 2014 2015 Cash flows from operating activities: (Thousands) (U.S. thousand dollars) (Note 6) Income before income taxes and minority interests ¥15,211 ¥12,137 $126,480 Balance at March 31, 2014 113,671 $66,716 $76,820 $631,993 $(21,789) $753,740 Adjustments for: Cumulative effects of changes Depreciation 4,157 3,821 34,570 in accounting policies — — — 236 — 236 Impairment loss 457 370 3,801 Restated balance 113,671 $66,716 $76,820 $632,229 $(21,789) $753,977 Amortization of goodwill 914 743 7,603 Cash dividends — — — (18,472) — (18,472) Amortization of negative goodwill (59) (59) (498) Interest and dividend income (474) (476) (3,941) Net income — — — 81,572 — 81,572 Interest expenses 463 810 3,850 Purchase of treasury stock — — — — (43) (43) Loss on disposal or sales of property, plant and equipment 7 455 59 Disposal of treasury stock — — 0 — 1,716 1,716 Decrease in notes and accounts receivable 2,624 1,747 21,822 Decrease due to acquisition of shares Increase in inventories (2,686) (310) (22,334) in a subsidiary — — — (10) — (10) (Decrease) increase in notes and accounts payable (3,657) 4,821 (30,414) (Decrease) increase in advances received on uncompleted construction (645) 324 (5,363) Net changes of items other than shareholders’ equity — — — — — — Other, net (3,185) (683) (26,483) Sub total 13,127 23,701 109,152 Balance at March 31, 2015 113,671 $66,716 $76,821 $695,319 $(20,116) $818,740 Interest and dividend received 473 478 3,939 Interest paid (486) (856) (4,044)

Accumulated other comprehensive income Income taxes paid (7,021) (3,163) (58,384) Other, net 202 286 1,682 Total Net Foreign Accumulated accumulated Net cash provided by operating activities 6,295 20,447 52,345 unrealized Deferred currency adjustments other gain (loss) on gain (loss) translation on retirement comprehensive Minority Total net Cash flows from investing activities: securities on hedges adjustments benefits income interests assets Acquisition of shares in newly consolidated subsidiaries (3,140) (4,202) (26,108) (U.S. thousand dollars) (Note 6) Investments in time deposit (91) (409) (757) Balance at March 31, 2014 $25,799 $(244) $44,155 $(18,243) $51,466 $23,680 $828,887 Proceeds from refund of time deposit 263 389 2,187 Cumulative effects of changes Payments for purchase of property, plant and equipment (3,666) (3,155) (30,483) in accounting policies — — — — — — 236 Proceeds from sales of property, plant and equipment 253 425 2,108 Restated balance $25,799 $(244) $44,155 $(18,243) $51,466 $23,680 $829,124 Payments for purchase of investments in securities (227) (321) (1,891) Payments for acquisition of shares in subsidiaries and affiliates (121) (293) (1,010) Cash dividends — — — — — — (18,472) Collection of loans receivable 4 3 34 Net income — — — — — — 81,572 Other, net 878 190 7,305 Purchase of treasury stock — — — — — — (43) Net cash used in investing activities (5,846) (7,372) (48,615) Disposal of treasury stock — — — — — — 1,716 Cash flows from financing activities: Decrease due to acquisition of shares in a subsidiary — — — — — — (10) Increase in short-term borrowings, net 834 755 6,934 Proceeds from long-term borrowings 1,512 14,360 12,577 Net changes of items other than Repayment of long-term borrowings (592) (24,071) (4,924) shareholders’ equity 12,775 (354) 43,500 (29,829) 26,091 7,282 33,374 Proceeds from issuance of bonds with stock acquisition rights — 15,150 — Balance at March 31, 2015 $38,574 $(599) $87,655 $(48,072) $77,557 $30,963 $927,261 Proceeds from issuance of bonds — 2,700 — The accompanying notes are an integral part of these statements. Redemption of bonds — (6,000) — Proceeds from disposal of treasury stock 206 610 1,715 Payments for purchase of treasury stock (5) (594) (41) Payments of cash dividends (2,218) (1,656) (18,449) Other, net (245) (209) (2,044) Net cash (used in) provided by financing activities (509) 1,045 (4,233)

Effect of exchange rate change on cash and cash equivalents 2,170 3,201 18,046 Net increase in cash and cash equivalents 2,109 17,320 17,541 Cash and cash equivalents at beginning of year 51,852 33,722 431,131 Increase in cash and cash equivalents resulting from change of scope of consolidation 119 808 990 Cash and cash equivalents at end of year (Note 28) ¥54,081 ¥51,852 $449,663

The accompanying notes are an integral part of these statements.

40 DAIFUKU CO., LTD. ANNUAL REPORT 2015 41 Daifuku Global Network Corporate Data Investor Information (As of June 30, 2015) (As of March 31, 2015) (As of March 31, 2015)

Americas Daifuku (China) Co., Ltd. Main Office: Shanghai, China Established May 20, 1937 Number of authorized shares 250,000,000 shares Daifuku North America Holding Company Guangzhou Branch: Guangzhou, China Farmington Hills, MI, U.S.A. Tianjin Branch: Tianjin, China Paid-in capital 8,024 million yen Total number of shares issued 113,671,494 shares Other offices: Beijing, Changchun, Chengdu, Chongqing, Fuzhou Employees 7,746 (consolidated) Number of shareholders 12,944 Daifuku America Corporation Nansha, Shenzhen, Suzhou, TEDA, Wuhan, Zhengzhou Main Office & Plant: Reynoldsburg, OH, U.S.A. Ratings Rating and Investment Information, Inc. (R&I) General meeting of shareholders June Other offices: Arizona, Austin, Indiana, Kentucky, Michigan, Tennessee Daifuku (China) Manufacturing Co., Ltd. Long-term: A- (single A minus) Stock exchange listing First Section of Tokyo Stock Exchange Utah Shanghai, China Short-term: a-1 (a - one) Stock transfer agent Sumitomo Mitsui Trust Bank, Limited Elite Line Services, Inc. Daifuku (China) Automation Co., Ltd. Transfer Agent Department Carrollton, TX, U.S.A. Jiangsu, China Principal Locations 4-5-33 Kitahama, Chuo-ku, Osaka Jervis B. Webb Company Daifuku (Suzhou) Cleanroom Automation Co., Ltd. Headquarters 3-2-11 Mitejima, Nishiyodogawa-ku World Headquarters: Farmington Hills, MI, U.S.A. Jiangsu, China Osaka 555-0012, Japan Boyne City Manufacturing Plant: Boyne City, MI, U.S.A. Major Shareholders Contec (Shanghai) Co., Ltd. Tel: 81-6-6472-1261 Fax: 81-6-6476-2561 Carlisle Forging Plant: Carlisle, SC, U.S.A. Main Office: Shanghai, China Harbor Springs Manufacturing Plant: Harbor Springs, MI, U.S.A. Tokyo Head Office 2-14-5 Shiba, Minato-ku, Tokyo 105-0014, Japan Number of Percentage Beijing Branch Office: Beijing, China Tel: 81-3-3456-2231 Fax: 81-3-3456-2258 Name shares held of total shares Wynright Corporation (Thousands) issued (%) Daifuku India Private Limited Shiga Works 1225 Nakazaiji, Hino-cho, Gamo-gun World Headquarters: Elk Grove, IL, U.S.A. The Master Trust Bank of Japan, Ltd. (trust account) 5,890 5.18 Main Office: Haryana, India Shiga 529-1692, Japan Other Offices: California, Florida, Indiana, Illinois, Kentucky Mizuho Bank, Ltd. 5,490 4.83 Bangalore Office: Bangalore, India Tel: 81-748-53-0321 Fax: 81-748-52-2963 Michigan, New Hampshire, Texas Japan Trustee Services Bank, Ltd. (trust account) 5,432 4.78 ForgePro India Private Limited Komaki Works 4-103 Komakihara, Komaki-shi American Conveyor and Equipment, Inc. Aichi 485-8653, Japan Northern Trust Co. (AVFC) RE 15PCT Treaty Account 4,134 3.64 Bangalore, India Reynoldsburg, OH, U.S.A. Tel: 81-568-74-1500 Fax: 81-568-74-1600 Sumitomo Mitsui Banking Corporation 4,080 3.59 Logan Teleflex, Inc. P.T. Daifuku Indonesia Daifuku Supplier Shareholder Association 3,949 3.47 Main Office: Jakarta, Indonesia Louisville, KY, U.S.A. The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,833 3.37 Deltamas Office: Bekasi, Indonesia Global Branches Nippon Tochi-Tatemono Co., Ltd. 3,207 2.82 Contec DTx Inc. Clean Factomation, Inc. Philippines 108 Aguirre Street, Legaspi Village Nippon Life Insurance Company 2,745 2.42 Melbourne, FL, U.S.A. Main Office: Gyeonggi-do, Korea Makati City, Philippines Daifuku Co., Ltd. 2,593 2.28 Asan Plant: Chungcheongnam-do, Korea Daifuku Canada Inc. Czech Tolarova 317, 533 51 Pardubice, Czech Republic Mississauga, Ontario, Canada Daifuku Korea Co., Ltd. Tel: 420-466-053-810 Fax: 420-466-053-816 Jervis B. Webb Company of Canada, Ltd. Main Office / R&D Center: Incheon, Korea Germany Luerriper Strasse 52, D-41065 Hamilton, Ontario, Canada Plant: Incheon, Korea Moenchengladbach, Germany Tel: 49-2161-49-695-0 Fax: 49-2161-49-695-20 Daifuku de México, S.A. de C.V. Hallim Machinery Co., Ltd. Querétaro, Qro., México Gyeonggi-do, Korea St. Petersburg Business Center Ligovskiy 266, Office 3.6 (Russia) 266/V, Ligovskiy Pr., St. Petersburg 196084 Russia Daifuku (Malaysia) Sdn. Bhd. Tel: 7-812-458-7336 Fax: 7-812-458-7331 Selangor D.E., Malaysia Europe Istanbul Büyükdere Cad. Altan Erbulak Sok. BCS Integration Solutions Sdn. Bhd. (Turkey) Atasoy Is Merkezi No:3 K:1 34394 Gayrettepe-Sisli/Istanbul, Turkey Daifuku Europe Ltd. Kuala Lumpur, Malaysia Main Office: Milton Keynes, U.K. Tel: 90-212-213-9393 Fax: 90-212-213-9394 Germany Branch: Moenchengladbach, Germany BCS Group Limited UK Unit 5, Dunfermline Court, Kingston Sweden Branch: Astorp, Sweden Auckland, New Zealand Milton Keynes MK10 0BY U.K. Tel: 44-1908-288-780 Fax: 44-1908-288-781 Jervis B. Webb Company, Ltd. Daifuku Mechatronics (Singapore) Pte. Ltd. Milton Keynes, U.K. Techplace I, Singapore

Daifuku Logan Ltd. Singapore Contec Pte. Ltd. Subsidiaries and Affiliates in Japan Main Office: Hull, U.K. Techplace I, Singapore Cautionary Statement with Respect to Forward-Looking Statements South East Sales and Service Office: Reigate, U.K. Contec Co., Ltd. The strategies, beliefs, and plans related to future business performance as described BCS Integration Solutions (Singapore) Pte. Ltd. in this annual report are not established facts. They are business prospects based on Contec Software Development Co., Ltd. Logan Teleflex (France) S.A.S. Singapore, Singapore the assumptions and beliefs of the management team judging from the most current information, and, therefore, these prospects are subject to potential risks and uncertainties. Ivry-sur-Seine, France Daifuku Business Service Corporation Due to various crucial factors, actual results may differ substantially from these forward- Taiwan Daifuku Co., Ltd. looking statements. These crucial factors that may adversely affect performance include: Daifuku Manufacturing Technology Co., Ltd. Main Office & Plant: Tainan, Taiwan 1) consumer trends and economic conditions in the Company’s operating environment; Hsinchu Branch: Hsinchu, Taiwan 2) the effect of yen exchange rates on sales, assets and liabilities denominated in U.S. dollars Asia Pacific Daifuku Plusmore Co., Ltd. and other currencies; 3) the tightening of laws and regulations regarding safety and other Taichung Plant: Taichung, Taiwan matters that may lead to higher costs or sales restrictions; and 4) the impact of natural Daifuku Renace Co., Ltd. BCS Airport Systems Pty Limited disasters and intentional threats, war, acts of terrorism, strikes, and/or plagues. Moreover, Taiwan Contec Co., Ltd. there are other factors that may adversely affect the Company’s performance. Hallam, VIC, Australia Hiniaratakan Corporation Xinbei, Taiwan BCS Logistics Solutions Pty Limited Iwasaki Seisakusho Co., Ltd. Daifuku (Thailand) Ltd. For further information, please contact: Hallam, VIC, Australia Main Office & Plant: Chonburi, Thailand [email protected] BCS Infrastructure Support Pty Limited Bangkok Office: Bangkok, Thailand Hallam, VIC, Australia Pinthong Plant: Chonburi, Thailand

42 DAIFUKU CO., LTD. ANNUAL REPORT 2015 43